By Gokul Anil Vice President , Doeren Mayhew Capital Advisors
When in the midst of economic uncertainty , preparing your business for sale may seem like an unideal strategy . However , if a sale is in your near future , this is often the best time to focus on your company and identify ways to build and create value .
Doeren Mayhew Capital Advisors offers these ideas to prioritize within your business to position yourself for maximized value should a potential sale opportunity arise .
1 . STREAMLINE PROCESSES TO PREPARE FOR INCREASED EARNINGS
Use this as an opportunity to invest in your business . Think of all the things you wished you had time to do while the team was too busy to get them done . Focus on areas that will increase your business ’ s efficiency and overall value . This may include training , implementing new processes or software , or investments in equipment or key personnel .
A buyer will value your company ’ s streamlined processes because it represents a strategic advantage directly impacting your bottom line , giving you more leverage when you ’ re ready to sell . Companies with well-defined , efficient processes are often more profitable than their competitors because they can produce goods or services at a lower cost and faster rate . This translates to higher revenue and profits , both critical buyer considerations .
Streamlined processes also allows for quick scalability to easily grow or expand , plus helps mitigate risks associated with a company ’ s operations , further increasing value in the eyes of a buyer .
2 . DIVERSIFY YOUR PRODUCTS AND SERVICES While this may seem like strange advice , competitors are likely finding areas to cut back , leaving opportunities into a new market for your business .
Expanding into new product categories allows a business to tap into new customer segments and revenue streams , potentially increasing market share and overall profitability . Diversifying your company can help spread its risk across different product lines , reducing your reliance on a single product or market .
This can help safeguard your business against economic downturns or changes in consumer behavior that may impact certain business lines . It can also foster innovation within your business , as it may require new research and development efforts , partnerships and marketing strategies . Ultimately , you are positioning your company for long-term success and sustainability in a competitive market .
3 . CONSIDER VERTICAL OR HORIZONTAL INTEGRATION As business valuations are depressed , this is the perfect time for businesses to acquire and grow . Vertical or horizontal integration is crucial for companies to enhance their competitiveness , gain market power and achieve economies of scale .
• Vertical Integration : This involves acquiring a company that operates in a different stage of the supply chain , such as a supplier or distributor . With today ’ s supply chain constraints and rising costs , acquiring a supplier could position your company to gain control over its supply chain and reduce its dependence on external suppliers . This can lead to cost savings , improved quality control and increased efficiencies .
• Horizontal Integration : This involves acquiring a company that operates in the same industry or market . By acquiring a competitor , your company can increase its market share , eliminate competition and gain access to new markets or customers . This can be particularly beneficial in industries with high barriers to entry , where it is difficult for new players to enter the market .
Continued on page 10 Issue 1 | 2023 VIEWpoint 9