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A Rhetorical Introspection for Driving Up the Value of Your Business

When you are looking for an exit strategy with your business it is natural to want the highest return possible. You have spent five, ten, and sometimes twenty plus years of your life developing your company and you deserve the highest price potential. So what are some things that will add value to your business? What is really going to make an investor willing to pay more to acquire the unique business you have established? Long-term contracts are one thing we have seen that truly adds to the selling price of a company.

One aspect of a business that is truly attractive to private equity firms, parent companies, or other investors is the existence of promising future cash flows.Think of it this way, if you were looking to invest in one of two different opportunities and both provided the same return, however, one is sure to pay while the other may or may not, which would you be willing to pay more for?

Some industries, however, are not subject to contracted cash flow. Even if your specific industry fits in this category, an established sales team that has proven capable of driving a steady stream of revenues will add an enormous amount of value to your business.

One other aspect that fits along with this category is the breadth of your customer base. If 50% of your business is coming from one customer, and you have retained that single client through a personal relationship, what will happen to that 50% of your business when you leave your company? This type of risk is not attractive to investors. The more customers you have, and the less percentage each customer consumes of your overall business the more valuable your cash flows will appear.

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.
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