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Increase the corporate value of the company and increase profitability

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Opinion holder entrepreneur Contributors are their own.

Most people in the US don’t rush into their dream home right away. Instead, they usually start modestly and upgrade gradually. When you’re ready to sell, make improvements and add value to your assets to try and maximize your profit. Likewise, if you’re planning to sell your business, it’s wise to make a deliberate effort to increase the value of your company, or corporate value.

Enterprise value is the total value of your business. However, the owner must remember that there are many deductions from that number due to debts and transaction costs such as legal advisors and his broker of the business. This reminds me of when I sold my first house. Then I checked how much it sold for and all the items for different people were sliced.

Many business owners don’t go as deep as they need to to improve their enterprise value. That’s because they are used to organizational tasks for which they have some degree of expertise. But you are responsible if you want to create maximum value for yourself, your team, and your brand legacy. obtain comfortable. The good news is that once you understand it, you can consciously drive your company’s values.

Related: If you want to negotiate a really great business deal, win the other side

How to increase corporate value

As with many organizational projects, increasing corporate value requires proper planning. But no plan works if you don’t know what you really want. So start by setting clear expectations. That might mean selling within five years and trying to value the business to $1 million or $100 million.

Once you have these parameters, ask yourself, “How can I reach that goal?” You will understand how big it is to take a bite to add value and close the sale. It’s common. There are performance documents to put together (usually based on the last 12 months), evaluations to get, marketing, negotiations, and other related work. This is a big reason why 54% of brokers say they should give him 6 months to 11 months to complete the sale.

We also need to find the evaluation range. This usually requires relying on financial metrics such as interest, tax, depreciation and amortization (EBITDA). Hire an expert to examine the dynamics of your business, including size and industry. They can then find ‘comparisons’ or ‘comps’ that are companies similar to yours to see what they sold for. , expressed as a multiple of the financial measure. By looking at the lower and upper bounds of the comp values, you can find a range in which your company might be able to sell. This scenario is like a realtor telling you how much similar homes in your neighborhood sold for.

In creating this profile of the industry, we identify the factors that contribute to each company’s price. Factors such as a completed basement, proximity to transportation, and energy-efficient appliances can provide an advantage in home sales. For companies, the competitive factors that drive value can be dedicated talent, intellectual property, or the number of strong brands within the business. Can you bring these dynamics into your business? If so, you may be able to push your company to the high end of the valuation spectrum.

Keep in mind that not everyone thinks the same way when looking at value drivers. If you’re buying a home and have young children running around the backyard, a pool can be a minus. However, when you imagine your family relaxing in that pool each summer, suddenly it becomes an asset. Therefore, in a company’s sales, it is important to know what kind of buyers are attracted to certain factors and to emphasize or build on the factors that attract the type of buyers you want to sell to.

Related: How to maximize corporate value through marketing

get ready to grow

Often times, after going through the process described above, companies find that they need to change some aspects of their planning and operations in order to sell at the price they want in the timeframe they want. The latter often means choosing to grow faster at a faster rate. How you grow depends on your culture and resources, but can include options such as investing in sales and marketing.

In the age of social media, improving your online presence is a great way to add value and grow. Your website and social media channels provide a means to provide a higher “wow factor” that impresses people and makes them want to engage with you. Statistics support the idea that social success matters. 77% of consumers would choose a brand over their competitors if they had a positive experience with the brand on social media, and 91% of executives said their company’s social media budget would increase over the next three years. expected to increase in So make sure your online channel reflects the same experience people get face to face with you.

When setting growth goals, be aware that you might be fooled into thinking a small percentage doesn’t make much of a difference. You may feel that 5% is not far from 8%. But applying higher percentages for several years in a row can lead to millions of dollars in added value by comparison.

When you’re preparing to sell, it becomes more important to be less tolerant of things that aren’t good for the company, so you get the best possible growth and final valuation. Ultimately, less tolerance should lead to better management of the company.

Related: 5 ways to create value from your intellectual property

Creating corporate value supports everyone

Many homeowners who don’t plan well before selling their home end up rushing to make improvements that should have been made far in advance. They can’t really enjoy these improvements and instead go through the sale feeling dizzy and stressed.

don’t make their mistake. By striving to create additional enterprise value well before closing the business, you can continue to have more control over your choices. When You have a chance to savor the satisfaction that it all comes together. Most importantly, it helps you think more critically about how you manage and, in turn, improve your leadership. It benefits everyone because it grows both you and your business.