July 2025 Newsletter
How to Best Determine the Value of Your Company Before Selling
Is it Better to Get a Business Valuation or an M&A Advisor
Before You Sell Your Business?
When you're preparing to sell your business, it's easy to think about finding the right buyer or negotiating favorable terms. But some business owners and CEOs of small and mid-size businesses ask us, “Is it worth the time and investment to get a professional business valuation, or is it more advantageous to engage with a Mergers & Acquisitions (M&A) advisor from the start?”
A comprehensive business valuation isn’t just about putting a price tag on your company. It’s a strategic tool that empowers you throughout the sales process. Or is it?
While a business valuation has value in certain circumstances (divorce, death, etc.) a trusted M&A Advisory firm has the needed experience and expertise to prepare for and sell your company, and will lead you through the entire sale process as your trusted advisor. My firm, CEO Advisor, Inc., is not just an M&A Advisory firm. I have founded, built and sold businesses for decades as a CEO myself, so we understand your position and the critical aspects of selling your business.
A comprehensive business valuation isn’t just about putting a price tag on your company. It’s a strategic tool that empowers you throughout the sales process. Or is it?
While a business valuation has value in certain circumstances (divorce, death, etc.) a trusted M&A Advisory firm has the needed experience and expertise to prepare for and sell your company, and will lead you through the entire sale process as your trusted advisor. My firm, CEO Advisor, Inc., is not just an M&A Advisory firm. I have founded, built and sold businesses for decades as a CEO myself, so we understand your position and the critical aspects of selling your business.
Here are 5 critical questions to ask yourself when considering to sell your business, as well as, the bottom line on business valuations vs. engaging with a seasoned M&A Advisor prior to a sale.
Can the Business Valuation:
Can the Business Valuation:
1. Give the Seller a Realistic and Defensible Asking Price?
A professional business valuation provides a well-supported and data-driven estimate of your company's worth. Without a business valuation, sellers may feel they are pricing too low or leaving money on the table; or too high deterring serious buyers. But the reality is, you should not assign a price tag on your business at all, and you should be working with an M&A advisory firm to run a competitive sale process to attract multiple buyers at the best price and terms.
2. Build Credibility With Potential Buyers?
Buyers are more likely to engage with sellers who can present clear, credible financial information from the outset. A third-party business valuation can demonstrate transparency and seriousness, increasing buyer confidence. But why would you divulge what is in fact a proposed price or worth of your business, when a competitive sale process through an M&A advisory firm reaching out to 75 – 150 or more targeted prospective buyers can yield multiple offers at a higher sale price. An M&A advisor will prepare your company for sale and provide a tight valuation range based on information for your business and industry.
3. Identify Value Drivers and Weaknesses?
Business valuations often highlight what adds or detracts value in your business. Whether it’s recurring revenue streams, customer concentration, or operational inefficiencies, growth rate compared to your industry, Gross Profit Margins for your industry, etc. this insight gives you the opportunity to make improvements before going to market—enhancing your ultimate sale price. A seasoned M&A advisory firm will assist you in providing a range of expected valuation once the firm is done with the hands-on sale preparation process and creation of a Data Room, which is a critical step in selling your company in any event. More importantly, a seasoned M&A advisor will be able to immediately identify the issues that need improving with your company and work directly with you to make the needed improvements during the preparation process and Data Room creation.
4. Strengthen Your Negotiating Position?
A business valuation gives you hard data to support your asking price. It also arms you with insights to better respond to buyer questions and challenges. Sellers who know their value can negotiate from a position of strength. Frankly, buyers do not consider what your business valuation states and will not base their price on it (and you may decide to not divulge it to prospective buyers anyway, especially if the business valuation is not a strong price or exposes weaknesses in your company). Each individual buyer has their own model that they use to input information from your Data Room and other information requested, and they will derive their own business value specifically for your company during a sale process.
5. Help with Tax and Exit Planning?
Determining a valuation range for your business does not necessarily avoid financial implications, particularly when it comes to taxes. If you are selling your business (other than for reasons such as divorce or selling to a business partner) your CPA and M&A Advisor will work with you and all agree on a range of valuation based on your industry, industry growth rate, type of business, company growth rate, Gross Margins, management team quality, size of your business, contracted recurring revenue, Net Profit, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and EBITDA Margin and other factors, which will then enable you to estimate a business value and do the desired tax planning, which will help your financial advisors assist you in a tax-efficient manner.
A professional business valuation provides a well-supported and data-driven estimate of your company's worth. Without a business valuation, sellers may feel they are pricing too low or leaving money on the table; or too high deterring serious buyers. But the reality is, you should not assign a price tag on your business at all, and you should be working with an M&A advisory firm to run a competitive sale process to attract multiple buyers at the best price and terms.
2. Build Credibility With Potential Buyers?
Buyers are more likely to engage with sellers who can present clear, credible financial information from the outset. A third-party business valuation can demonstrate transparency and seriousness, increasing buyer confidence. But why would you divulge what is in fact a proposed price or worth of your business, when a competitive sale process through an M&A advisory firm reaching out to 75 – 150 or more targeted prospective buyers can yield multiple offers at a higher sale price. An M&A advisor will prepare your company for sale and provide a tight valuation range based on information for your business and industry.
3. Identify Value Drivers and Weaknesses?
Business valuations often highlight what adds or detracts value in your business. Whether it’s recurring revenue streams, customer concentration, or operational inefficiencies, growth rate compared to your industry, Gross Profit Margins for your industry, etc. this insight gives you the opportunity to make improvements before going to market—enhancing your ultimate sale price. A seasoned M&A advisory firm will assist you in providing a range of expected valuation once the firm is done with the hands-on sale preparation process and creation of a Data Room, which is a critical step in selling your company in any event. More importantly, a seasoned M&A advisor will be able to immediately identify the issues that need improving with your company and work directly with you to make the needed improvements during the preparation process and Data Room creation.
4. Strengthen Your Negotiating Position?
A business valuation gives you hard data to support your asking price. It also arms you with insights to better respond to buyer questions and challenges. Sellers who know their value can negotiate from a position of strength. Frankly, buyers do not consider what your business valuation states and will not base their price on it (and you may decide to not divulge it to prospective buyers anyway, especially if the business valuation is not a strong price or exposes weaknesses in your company). Each individual buyer has their own model that they use to input information from your Data Room and other information requested, and they will derive their own business value specifically for your company during a sale process.
5. Help with Tax and Exit Planning?
Determining a valuation range for your business does not necessarily avoid financial implications, particularly when it comes to taxes. If you are selling your business (other than for reasons such as divorce or selling to a business partner) your CPA and M&A Advisor will work with you and all agree on a range of valuation based on your industry, industry growth rate, type of business, company growth rate, Gross Margins, management team quality, size of your business, contracted recurring revenue, Net Profit, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and EBITDA Margin and other factors, which will then enable you to estimate a business value and do the desired tax planning, which will help your financial advisors assist you in a tax-efficient manner.
Conclusion
The real question to ask yourself is – What do you need more - a business valuation or an M&A advisor?
The real question to ask yourself is – What do you need more - a business valuation or an M&A advisor?
Obtaining a business valuation before selling may provide you with some level of comfort – but a seasoned M&A advisory firm that focuses on small and mid-size businesses and understands your industry can be far more important and serve multiple purposes. An M&A advisor will:
- Provide a business valuation estimated range (that prospective buyers will formulate on their own in any case)
- Work closely with you on all of the preparation needed and create a comprehensive Data Room that is critical to a sale
- Create a list of 75 – 150+ prospective buyers with contact information and do all of the outreach, schedule meetings, fulfill information requests and secure written Letters of Intent (LOI) offers
- Work with your chosen buyer through the arduous Due Diligence Process
- Be the liaison with you, your buyer and your corporate/transaction attorney all the way through to the closing.
An M&A advisor will be your trusted advisor throughout the sale and manage the entire sale process. Whether you're a year away from selling or ready to start the sale process now, hiring a seasoned M&A advisory firm like CEO Advisor, Inc. is the first step toward a successful exit strategy.
CEO Advisor, Inc. has over 160 years of combined experience and expertise in hands-on advising of CEOs of small and mid-size businesses and over 85 years of mergers and acquisitions experience. To address your exit strategy and mergers and acquisitions needs, contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
CEO Advisor, Inc. has over 160 years of combined experience and expertise in hands-on advising of CEOs of small and mid-size businesses and over 85 years of mergers and acquisitions experience. To address your exit strategy and mergers and acquisitions needs, contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
5 Ways CEOs Can Continuously Improve Their Performance
Continuous improvement is vital to performing optimally as a CEO and business owner. The best CEOs make time for it, because they see it as an investment in themselves and their company that will pay off in real dollars now and over time. So what specifically can you do as a CEO to improve your skills and performance? Here are 5 ways:
1) Attend a Training Program To Fill Your Gap in Expertise
I have given many seminars on excelling at the CEO position. The biggest excuse I hear from CEOs for not attending is that they don't have time. From my experience the CEOs who do attend are typically the ones who are already better than most. Because of this, they know how to make time to improve their skills that ultimately improve your company. If you think you don't have time to get better at managing your company, then you are not doing your job properly. Choose the one area where you need the most help, and seek the help you need.
2) Meet with Highly Experienced and Successful People
As a CEO it is part of your job to find people from outside your company who can bring knowledge and experience to bear on your challenges and goals. Make an effort to get to know people in your industry who have relevant experience. Seek out the other leaders in your industry to establish relationships. Or contact a proven Business Advisor that will commit real time to working with you.
3) Study Yourself
Learning about yourself, how you think and react, is critical to developing as a CEO and overcoming your internal biases. Bullet point what you are an expert in, what you have satisfactory knowledge in, and what are not your areas of expertise. Be honest about your gaps of knowledge, and the areas of expertise you need help. A Business Advisor that will work with you and mentor you, while helping your business grow, is priceless.
4) Gather Feedback
If you are not getting feedback about your performance, then you have a problem. It is not enough to just ask for feedback and hope it comes to you. You should actively solicit feedback both from your employees, as well as, your Board or outside advisors. Getting feedback from employees will often require an anonymous feedback mechanism or third-party gatherer. Feedback from your advisors should be both informal and formal, as well as, on a regular weekly schedule.
5) Seek Out Advisors
Reach out to professional business advisors to gain from their expertise and experience. We understand the CEO role - I was the founder and CEO of a software company that I funded, grew and sold to a NASDAQ company in 2003. For 21 years we have advised CEOs on all aspects of their companies. The CEO job is unique, so make sure you have someone in your circle that has been in the chair and knows the challenges of the job. Avoiding lost time and missteps converts to big dollars in your pocket and propels your company forward with greater value.
CEO Advisor, Inc. specializes in advising CEOs and business owners on all aspects of small and mid-size businesses. Our mission is to grow your business to the next level, as well as, advise you through the ultimate sale of your company. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
1) Attend a Training Program To Fill Your Gap in Expertise
I have given many seminars on excelling at the CEO position. The biggest excuse I hear from CEOs for not attending is that they don't have time. From my experience the CEOs who do attend are typically the ones who are already better than most. Because of this, they know how to make time to improve their skills that ultimately improve your company. If you think you don't have time to get better at managing your company, then you are not doing your job properly. Choose the one area where you need the most help, and seek the help you need.
2) Meet with Highly Experienced and Successful People
As a CEO it is part of your job to find people from outside your company who can bring knowledge and experience to bear on your challenges and goals. Make an effort to get to know people in your industry who have relevant experience. Seek out the other leaders in your industry to establish relationships. Or contact a proven Business Advisor that will commit real time to working with you.
3) Study Yourself
Learning about yourself, how you think and react, is critical to developing as a CEO and overcoming your internal biases. Bullet point what you are an expert in, what you have satisfactory knowledge in, and what are not your areas of expertise. Be honest about your gaps of knowledge, and the areas of expertise you need help. A Business Advisor that will work with you and mentor you, while helping your business grow, is priceless.
4) Gather Feedback
If you are not getting feedback about your performance, then you have a problem. It is not enough to just ask for feedback and hope it comes to you. You should actively solicit feedback both from your employees, as well as, your Board or outside advisors. Getting feedback from employees will often require an anonymous feedback mechanism or third-party gatherer. Feedback from your advisors should be both informal and formal, as well as, on a regular weekly schedule.
5) Seek Out Advisors
Reach out to professional business advisors to gain from their expertise and experience. We understand the CEO role - I was the founder and CEO of a software company that I funded, grew and sold to a NASDAQ company in 2003. For 21 years we have advised CEOs on all aspects of their companies. The CEO job is unique, so make sure you have someone in your circle that has been in the chair and knows the challenges of the job. Avoiding lost time and missteps converts to big dollars in your pocket and propels your company forward with greater value.
CEO Advisor, Inc. specializes in advising CEOs and business owners on all aspects of small and mid-size businesses. Our mission is to grow your business to the next level, as well as, advise you through the ultimate sale of your company. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
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