Business Valuation & Value Enhancement

Business Valuation and Value Enhancement Identification Program

Business owners should prepare their company for sale or merger prior to presenting it to potential acquirers or business partners. Advanced preparation, as outlined below, can enhance the perceived value of a business.

Drawing on our experience in identifying and implementing value enhancement programs, along with expertise in valuing, buying and selling companies, we will suggest steps to capitalize on the strengths of the business and alleviate or mitigate its weaknesses. This will improve marketability and position the business to demand more favorable price and terms, along with a shortened sale process, when the decision is made to sell.

The following is an outline of our Ten-Step Process:

Step One:

Meet with the Shareholder(s) to fully understand the objectives, including owner post-sale plans, goals, future involvement and deal structure implications.

Step Two

Conduct a "mini due diligence" to understand key issues and opportunities from a buyer's perspective.

This involves an in-depth analysis of the operational and financial aspects of the business.

A combination of questionnaires, management queries and financial analysis is utilized to identify those areas of the business that most impact value and therefore require the most attention.

Step Three

Analysis and recasting of financial statements ( most recent 3 years ) - Financial statements are typically prepared for tax purposes, not for business sale purposes, and do not accurately reflect the true profitability of a business.

Our role will be to "read between the lines" of the financial statements and tax returns to interpret the total discretionary pre-tax income that would be available to an acquirer.

Step Four

Current Business Valuation - The process of enhancing value begins with a business valuation to measure current value and establish its value drivers.

Step Five

Assess likely exit scenarios including most likely types of buyers - determination of available exit strategy options and analysis of which could make the most sense for the owner, given present circumstances. This can involve selling to a third party ( In or out of industry, affiliated industry, investment group, private equity group, individual, etc. ), to employees, to relatives, merging with a strategic partner or not selling the business.

Step Six

Help clarify the decision, "Does it make sense to sell the company?" by providing a reality check as to potential financial and lifestyle consequences or benefits of a sale.

Step Seven

Gap Analysis:

  • Determine the difference, if any exists, between the current value of the business and the owner’s desired value objective.

  • Identify the actions and results required to close the gap.

Step Eight

Do a risk factor / value enhancement factor analysis:

  • How does the company currently rank in the 20 plus value driving areas?

  • What are the key problems or issues that could cause concern to a potential acquirer?

  • This will help identify those areas that need to be addressed to maximize value. The owner can then implement a strategy now that will make the business more attractive to a purchaser later. The end result is a clear path for improving business performance in a reasonable period of time (usually 6 to 18 months), thereby creating a sustainable increase in the value of the business.

  • Determine Improvement of identified value enhancement factors.

Step Nine

Update the business valuation after 1 year - An astute business owner should know the current value of his or her company as part of a yearly analysis of the business. How does it stack up on a year-to-year basis? Has value increased as expected? Ascertain if there has been improvement of the identified value enhancement factors.

Step Ten

Update business valuation after year 2 (If applicable)


For more information about how you can benefit from the services of Sun Mergers & Acquisitions, please call us toll free (800) 232-0180 or fill out his short form.

Sun Mergers & Acquisitions
411 Route 17 South ~ Suite 300 ~ Hasbrouck Heights, NJ 07604
Phone: (201) 727-1300

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