Around the Web: A Week in Summary
A recently published Divestopedia article entitled “The Top 10 EBITDA Adjustments to Make Before Selling a Business” explains common practices in adjusting EBITDA before selling a business for the purpose of helping the seller get the best value from the sale. The process of normalizing a company’s financials is often done by investment bankers before a sale to help show potential buyers the best possible version of a company’s financials with the ultimate goal of getting a higher selling price. The following adjustments are some of the best:
- Non-Arms-Length Revenue or Expenses
- Revenue or Expenses Generated by Redundant Assets
- Owner Salaries and Bonuses
- Rent of Facilities at Prices Above or Below Fair Market Value
- Start-Up Costs
- Lawsuits, Arbitrations, Insurance Claim Recoveries and One-Time Disputes
- One-Time Professional Fees
- Repairs and Maintenance
- Inventories
- Other Income and Expenses
Adjustments in these factors can be crucial to getting the most out of a business sale. Follow the link to read more about how each of them can affect the sale price of a business.
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A recent article published on Axial Forum entitled “M&A Success Isn’t About Luck — It’s About Taking Control” focuses on a very important point for those on either side of a business transaction: whether you’re buying or selling a business, you are ultimately in control of the situation. Sellers control when to sell their business, know the facts of their business and industry better than most, and should have clear goals in the process. In regard to buyers: they are in control over when to buy a business, what business they should buy, and should also have clear goals to succeed in the buying process.
With so much say and so much control over the transaction process, luck isn’t even a relevant factor to achieve success for either party in a business sale. Taking the proper approach to a transaction is paramount to a successful transaction.
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A recent The Portfolio Partnership article “Always Be Grooming for Sale” explains the importance of business growth with the idea of an eventual sale in mind. This is an interesting approach and allows growth while also improving the desirability of the business in the eyes of an acquirer. Growth strategies that can be implemented with this in mind include positioning, having an integrated sales process, a solid product creation team and process, a deep pool of talent, and the measurement of specific business metrics that help judge performance and growth. These are all important and relevant and while they can drive a growth strategy for the present, they will also help to make your business more attractive to a buyer in the future.
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