BUSINESSNEWS
How to add maximum value to your business before you sell it
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DAVID LENG , GROUP CHIEF executive at Customade Group , has urged any owners considering selling their firms to think ahead and look at how they can add value to their businesses before they begin the sales process . David , who joined a panel of experts on mergers and acquisitions at the recent Glazing Summit conference , also called for them to be ‘ straightforward ’ with their figures to aid the process of selling their business .
Sharing his experiences of buying and selling almost 20 companies in the fenestration industry , David said : “ Investors need good reasons to buy a company , so the first step for any vendor is to spend time examining their own business model before they even put their firm up for sale . At this stage , they should ensure that they have the right products and management team in place to add maximum value to their organisation and make it more attractive to buyers . Essentially , vendors need to ask ‘ why would someone want to buy my business and what is the risk to the business when the vendor steps away ’?
“ In a flat market , you must be very clear where the value lies in your business . The most effective ways for the purchaser to add value after the sale are either by scaling-up the size of the organisation or by introducing more products or customers . Businesses that demonstrate they can fall into one of these categories are safer and more lucrative prospects for potential purchasers on the acquisition trail .
“ Just as importantly , vendors need to get their numbers right . No investor wants surprises , so companies must be straightforward with their figures . Around three quarters of deals fail and , in many cases , it ’ s down to lack of transparency and poor financial forecasting . Remember , companies are not just buying your organisation ’ s history , they ’ re also buying its future , so they need to know what to expect .”
In light of the industry experiencing a 30 % drop in fabricators whilst the number of installers rises , David and the rest of the Glazing Summit panel also offered practical advice to potential vendors on how to raise their profile in advance of a sale and how to secure the right buyer .
David added : “ Selling a business is a huge financial transaction and owners must appreciate that buyers will want to see the long-term potential of that business . For instance , you cannot underestimate the value of your brand and the power of your reputation . Firms should consider their corporate image and spend time engaging with prospects through channels like PR , networking and social media .
“ And , finally , you need to get the right funding for your deal , whether it ’ s finance or private equity . You shouldn ’ t immediately rule out overseas investors either as they often give a higher valuation on larger scale businesses . The key is to find the right buyer who understands your business and is prepared to offer you the best price for it .”
Customade Group was also a sponsor of the Glazing Summit – a pioneering event , which aimed to tackle the key issues affecting fabricators , installers and glass companies in the window , door and conservatory industry . The conference attracted 400 entrepreneurs , executives and business leaders from across the industry .
Andrew Scott , CEO of Purplex Marketing and Insight Data , who organised the event , added : “ The aim of the Glazing Summit was to finally provide a platform for the industry ’ s most influential business leaders to come together to meet , learn and share ideas and information that will allow them to confidently plan for the future . Judging by the feedback we received it seemed this was definitely accomplished . The support of the Customade Group as a sponsor and David Leng as a speaker showed the relevance and importance of such a major industry conference . David ’ s insight in the acquisitions debate was invaluable and helped to create one of the day ’ s most powerful discussions .”
www . customade . co . uk
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