Articles and Education

Maximizing Your Business Value: Strategies from a 30-Year Industry Veteran

The decision to sell your business is usually motivated by one of these 7 reasons:

  1. Getting ready to Retire – and selling the business is a core part of building your financial resources to do that. 
  2. Succession Issues – Not all business owners, even family business owners, have a willing and capable successor to leave their business to. Selling is the clearest alternative.  
  3. Lifestyle Change – over the past few years especially, more people are considering changing the way they live in a fundamental way. Working part time, traveling and devoting more time outside work all require funding. 
  4. Health Reasons – running a business is never easy. That stress can take a toll on your health, and poor health can take a toll on your business.  
  5. Market Conditions – whether today’s market is a bust, boom or somewhere in between many owners try to time their exit to make the most money or save themselves the most hardship. 
  6. Risk Management – Owning a business can come with financial risk. As individuals get closer to retirement, their tolerance for risk often decreases.  
  7. Burnout – Running a business can be stressful and exhausting. After many years at the helm, some business owners may simply feel ready for a change and decide to sell. 

And each one of these reasons – your reason – will impact HOW you sell the business.  

This is where a 30-year industry veteran steps in. With an extensive career in the mergers and acquisitions realm, Albion Mergers and Acquisitions has focused exclusively on representing sellers in the freight forwarding and customs brokerage industry. 

In that time, we’ve learned the valuation and selling strategies that fit your motivation. 

This article will share some of these strategies and how they fit into the sales process. Stay tuned to unlock the keys to your business’s true potential. 

The Basis of Business Valuation 

A comprehensive business valuation takes into account various factors including: 

  • financial performance 
  • assets and liabilities 
  • market conditions 
  • industry trends 

But it’s not just about crunching the numbers; it’s about understanding the unique value proposition of your business and how that aligns with market expectations.  

And with individual buyers.  

This process is especially significant in the freight forwarding and customs brokerage industry, where companies often have intricate financial structures and diverse revenue streams. 

As a business owner contemplating a sale, gaining a thorough understanding of your business’s valuation is your first step toward getting the price and terms you’re looking for.   

A thorough understanding of your company’s objective value gives you a strategic advantage during negotiations, helping you secure the best possible deal for your life’s work. 

The Power of Restating Earnings 

Earnings restatements are adjustments made to previously reported financials to rectify errors, account for new information, or reflect changes in accounting methods or business operations.  

The statements tell the story of your business from an earnings perspective. But like any story, even those based on hard facts, the way you tell that story can make a significant difference in how it’s read. 

Oftentimes during a company valuation, we find opportunities that offer a more accurate assessment of a company’s financial health. And that has a big impact on the value and how potential buyers perceive the company as a whole.  

Let’s illustrate this with an example. Suppose a company, let’s call it Company XYZ, sells off a significant revenue-generating division.  

Following this sale, the company may choose to restate its earnings, excluding the financial results of the sold division from its financial statements for the last five years.  

This restatement can help potential buyers and investors understand how the company performs without the recently divested asset, giving them a more accurate picture of the company’s current and future earning potential​​. 

Painting the Picture for Future Growth 

Growth potential is usually a key factor in motivating buyers. And this is particularly relevant in the freight forwarding and customs brokerage industry, where changing regulations, technological advancements, and global trade dynamics can significantly impact a business’s future prospects.  

As a seller, your ability to effectively communicate your business’s growth potential can significantly influence a buyer’s perception of its value. 

But envisioning future growth isn’t merely about making optimistic predictions. It involves a deep dive into your business’s capabilities, industry trends, and market opportunities.  

It also requires a useful strategy that details how your business plans to capitalize on these opportunities in the future – as if you weren’t selling the business at all. Typical growth plans usually involve:

  • plans to expand into new markets. 
  • develop new services. 
  • leverage technology to improve operational efficiency. 
  • expand personnel to handle higher volumes. 

For instance, you might envision your business branching out into e-commerce fulfillment, a sector that has been experiencing rapid growth. Or providing specialized shipping or storage options. Or improving your technology that impact how your business is run.  

By providing potential buyers with a clear vision of future growth and a well-defined strategy to achieve it, you can make your business more appealing to them. Not only does this help to create a compelling narrative around your business’s future, but it also demonstrates your understanding of the industry and the strategic thinking that has contributed to your business’s success.  

This is where consulting with a real industry veteran that’s an expert in crafting these visions of the future can have the biggest impact.  

Tailoring Your Sales Message 

In the world of mergers and acquisitions, one size definitely does not fit all.  

When it comes to selling your business, the ability to tailor your sales message to specific potential buyers can significantly increase your chances of a successful sale. This is because different buyers have different motivations, priorities, and criteria when evaluating potential acquisitions.  

The same way YOUR motivations impact your outlook on selling your business.  

For example, a strategic buyer may be interested in your business because of synergies with their existing operations, while a financial buyer may be more focused on your business’s profitability and growth potential.  

Understanding these differences and crafting your sales message accordingly can help highlight the aspects of your business that are most appealing to each type of buyer. 

Furthermore, tailoring your message can also help establish a stronger connection with potential buyers. A personalized approach shows that you understand their needs and have considered how your business can meet them.  

This not only makes your business more appealing, but also demonstrates your professionalism and attention to detail, qualities that can further enhance a buyer’s confidence in you and your business.  

Remember, selling a business is not just about presenting facts and figures; it’s also about telling a compelling story that resonates with the buyer. A tailored sales message is a powerful tool in this regard, one that can significantly influence a buyer’s perception of your business and its value. 

But that’s where the experienced mergers and acquisitions team at Albion M&A come in. Your expertise is in growing and running your business. Ours is in crafting the right message to position it for sale – and then connecting that message with the right potential buyers.