Checklist To Improve The Valuation Of Your Business
February 10, 2013 4 Comments
Ways To Bump-up The Valuation Of Your Business
The ideal management consists of people who have been part of successful mega-deals, have depth in your industry, and worked together as a team. Sadly, there’s no such group. But some get close. Tap them.
Ensure a majority of board consists of outsiders. Try and attract some well-known luminaries without cash, and build on their reputations to benefit your own valuation.
Part of the concept in both Dream Team and Board Seats is to build value by affiliation. The concept can be extended to contract, outsourcing, and joint venture deals.
Solve a Problem
Whatever the product or service you offer, it must solve some human problem that is not solved better elsewhere.
Know Your Rivals
To prove that your solution is the best, you must also expose the failings of the competitive solutions available in market.
If you have customers, showcase them. It helps to put a face on real-world problems solved for real people.
To maximise valuation, you need to anchor down the intellectual property — via patents, trade secrets, and non-compete clauses.
Wide and Deep
Investors want to see a whole family of products for today and beyond. But they also want each product to be robust. So, focus on your best product.
Unlike selling a second-hand car, a company’s valuation is best maximised with honest disclosures.
When you do your projections, go out 5 years, then cut it back to 3 and compare them. If the three-year projection is almost as good, just show the three years, otherwise five.
Depending on your goals, sometimes deal structure can be traded off against a higher valuation. Properly done, both sides can stand to benefit, and the valuation zooms.
There is no one standard outline for a business plan. Each has to be tailored to the qualities of each company. Have a plan with all the key information.