The Enterprise Value Specialists at Ceibass know that hard work on the right company initiatives along with the right timing can greatly enhance the value and sales price of your green industry business.
“Right now is one of the best times to sell in the history of our industry,” says Tom Fochtman, Ceibass CEO. “Valuations have never been higher. Buyers are paying top dollar. It’s a good economic cycle. Interest rates are low. And expectations and confidence about the future are high.”
So what should a business owner focus on, right now, to maximize their company’s value (and sales price)?
The right revenue mix.
Buyers are buying future revenues and they much prefer reoccurring revenue. Make sure your revenues are at least 70% maintenance related with a proven track record of contract renewals at 90% or greater.
Develop a positive trending history of increased revenues & profits.
For 3 years minimum, the last 5 years is even better.
Never ever forget that what a buyer is buying is future revenues and earnings.
Lower expected CapEx.
Keep working capital investment requirements low. Cut average account receivables days outstanding, clean up bad debt, increase working capital turns. Keep it tight.
Have strong bench strength.
Your management team should excel at setting goals and achieving them. If you’re an owner, work yourself out of a job. Have a quality employee base with low turnover.
Maintain a legal workforce.
Having a legal workforce is a very big deal today. If a company E-verifies, it will increase their multiple. If they use H2B it indicates that portion of the workforce is legal but there is no guarantee you will get your visa’s approved next year. It’s a year to year program. It actually has negative connotations today because if a company does not get approved for H2B next year, they will have to go out and replace all those employees in a very low unemployment market. Very difficult. Whereas, if a company E-verifies and has a stable workforce, it’s a pretty big deal in the industry.