May 2025 Newsletter
Prepare Now for a Future Sale of Your Business - 10 Critical Steps
- For many entrepreneurs in America, building a successful company and eventually selling it for tens or hundreds of millions of dollars represents the entrepreneurial dream. You can increase the likelihood of achieving this goal by taking specific steps now to prepare your company for a successful sale.
- Your three main critical goals are to, 1) Increase profits, 2) Build value in the business and 3) Mitigate risk to future buyers. This requires a lot of expertise, experience and hard work, and CEO Advisor, Inc. is an expert in this process.
- 1. Increase Your Growth Rate
- A key metric of value, especially for technology and many other companies, is to break out of 10% growth per year and increase your growth rate to 20% - 30% per year. This may take a very different approach and mindset than you have used in the past, and you may need the expertise of a Business/M&A advisor to get there. Prior to and during a mergers and acquisitions (M&A) sale process, it makes sense to improve your sales strategy and very prudently invest in growth initiatives, while staying very focused on running your business. In addition to organic growth, an acquisition to accelerate your growth can greatly increase your Revenue and value.
- 2. Grow Both Your Sales and Profits
- Focus on substantially ramping up both Revenue and Profit. Profitability is a key way to bolster value. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is primarily used as the key metric in mergers and acquisitions for valuation purposes. The higher your EBITDA and the higher your EBITDA multiple, the higher your valuation will be at your exit. Higher EBITDA multiples come from becoming a larger company with greater sales and profits.
- 3. Create a Recurring Revenue Model
- A recurring revenue or subscription model will allow you to obtain a higher EBITDA multiple and thus a higher valuation. Software-as-a-Service (SaaS) companies can be challenging to generate substantial Net Profits initially, but can be extremely effective in building value toward a lucrative exit. Many businesses, software or otherwise, can adopt a recurring revenue or subscription model to achieve a more forecastable and stable revenue stream – a key driver of generating value in your business.
- 4. Focus on Your Financials and Execution
- An Audit or Accounting Review of your Financial Statements or a Quality of Earnings report is likely to be required as part of a sale process. You should consider having your Financials Audited, or at least having an Accounting Review, by a reputable accounting firm as part of your preparation prior to an exit. A Quality of Earnings report, Accounting Review or full Audit will give buyers confidence in your Financial Statements and will educate you on what Generally Accepted Accounting Principles (GAAP) Accrual basis accounting practices look like. The importance of proper Financial Reporting cannot be overstated. For M&A purposes, focus on what the acquirer is looking for to get a transaction completed. CEO Advisor, Inc. can assist you in the needed preparation and gaining the expertise you need.
- 5. Prepare Thoroughly and Create a Data Room of KPIs, Metrics and Company Information
- Any prospective buyer is going to look closely at the growth potential of your business. Buyers need to first understand your business model, sales strategy, management team, products and services and historical Financials and Forecast for the next three years. Preparation of a Data Room of information, including thirty to forty key documents is key to presenting value to buyers. CEO Advisor, Inc. is an expert in preparing a company for sale and creating a professional Data Room.
- 6. Create a 3-year Financial Projection
- It will be necessary to create a 3-year Financial Forecast. Make certain the Forecast you project is aggressive, but achievable. Hitting your Financial Forecast will be absolutely critical once you begin the sale process, including during the Due Diligence process. Achieving your Financial Forecast is great while in the M&A process; missing your Financial Forecast can seriously jeopardize your valuation and may require you to renegotiate your sale price or terms.
- 7. Address the Skeletons in Your Closet
- Head off any issues during the preparation prior to selling your company. If there are any potential or real fires, put them out prior to commencing a sale process. Address these issues head on in a proactive manner and be transparent with anything that a buyer may consider as "hair on the deal." Resolve lawsuits if possible, increase sales, turn losses to profits, and fix other issues that will scare away buyers or diminish your value. CEO Advisor, Inc. is an expert in this area. There is absolutely no reason to apologize for anything that happened in the past. Put your emotions aside, be objective, explain your issues and move forward with a definitive, proactive plan to exit and sell your company.
- 8. Optimize Sales Management and Your Sales Team
- Prior to and during your sale process, you should maximize sales opportunities to increase the sales growth and value of your business. Maximizing your sales strategy, sales management and practices and execution is central to the improvement of your business and making your business more sellable and valuable. Have your Sales Pipeline up to date at all times and focus on strong sales management on-going.
- 9. Cut the Fat
- Prudently look at your expenses and eliminate unnecessary costs and expenses to improve Gross Margins and EBITDA. Every dollar added to EBITDA will be worth many times that amount in value. This may require tough decisions so work with your M&A Advisor like CEO Advisor, Inc. to make the best decisions to maximize your value. Profitable companies attract buyers and high purchase prices.
- 10. Hire an M&A Advisor
- An M&A Advisor will provide a wealth of expertise, mange the entire sales process and do a lot of the heavy lifting to prepare for and pitch your company to interested buyers. For starters, an M&A advisor will help you prepare a management presentation for your business. They will also help you better understand and present your Financials and prepare all the information needed to start the sale process.
- Once you are ready to go to market, the M&A Advisor will prepare and finalize your targeted acquisition list, make calls to all prospective buyers and set up meetings, secure a Letter of Intent (offer), organize and manage the Due Diligence process and coordinate with your corporate/transaction attorney for the legal documents through to closing.
- Keep the sale of your company 100% confidential and do not discuss it with your employees, clients, vendors and especially your competition. Your primary role is to stay focused on your company's performance during this complex process of preparing to sell and the sale process. With a competitive sale process and the proper expertise and experience on your team, you can look forward to achieving your life's goal.
- CEO Advisor, Inc. has tremendous experience and expertise in Mergers and Acquisitions for small and mid-size companies. Mark Hartsell, MBA, President has over forty years of experience, including thirty-five years of experience in Mergers and Acquisitions. This is one of the most important decisions you may make in your life. To address your 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.
Invest in Yourself - 5 Critical Steps
As a business owner and CEO, you make investments in your business on an on-going basis. The question is – are you investing in yourself? Investing in yourself and your business may generate the largest return on any investment you can make anywhere on this planet.
Investing in yourself will ensure you are making the best decisions and enables you to dictate your future and your success. Investing in yourself will add critical skills (remedy your blind spots) that will be the difference in far greater success. Investing in yourself and your business also enables you to increase sales, profits and the value of your business toward an exit and the largest payday of your life.
Different than investing in real estate, bonds or equities, investing in yourself is the key to your success provided you have the proper road map to achieve your goals. Don't go it alone - this may be the most important step of your life. Meet with a Business/M&A advisor to discuss the steps below, and to address the specific needs of both you and your company.
Here are 5 steps you can take right now that will pay tremendous dividends:
1. Strategic Direction Toward an Exit Strategy
The direction of your business is critical to your success. Now is the time to re-assess, strategize and review the year-to-date progress and make needed adjustments in your business. Growing 10% year after year is not a gauge of success, and certainly will not increase the value of your business. With a clear strategy and sales focus you will ensure success in 2025 and beyond. For 21 years, CEO Advisor, Inc. has helped CEOs create strategies for increased sales, profits and business value toward an optimal exit. Devise an Exit Strategy with a seasoned Business/M&A advisor as one of the most important steps of your business-related life.
2. Focus
If you are not sure where you're going, you will never get there. Focus on your highest priorities and document your priorities with target completion dates and who will accomplish them. Focus on what meets prospects and customers' needs, drives sales and profits, and builds value in your company. A business advisor that specializes in working with CEOs can be a tremendous asset to you and your company by working with you two hours every week plus performing hands-on work to achieve your goals.
3. Review the Numbers
Create key metrics in a Management Dashboard for your business that will clearly tell you if you are on track to achieve results, maximize profits and optimize the value of your business. This will provide easy to access information that is critical to success. Review your Financials and make sure to understand your Financial Statements thoroughly so you can address specific aspects of your business and make needed decisions based on your financials. Track these key metrics and financials monthly as a critical step in the health, growth and success of your business.
Defining and tracking these key metrics will substantially increase sales an profits, enabling you to make faster and improved decisions. CEO Advisor, Inc. regularly assists CEOs in setting up these key metrics in a Management Dashboard to drive success and can help you analyze your financials and provide feedback on how to maximize your profits and valuation.
4. Set Your Goals
Establish clear near-term and long-term goals for both you and your business. Create and prioritize major initiatives and deadlines around what is needed to accomplish these goals. Then, assign personnel, management or advisors to ensure timely completion of these initiatives and goals. This can be one of the best decisions you can make.
5. Invest in Needed Advice
The business issues above are just some of the more critical issues that you must tackle every day. The impact on your business, your life, your bottom line, your cash flow and the value of your business is tremendous. A trusted, seasoned Business/M&A advisor can be the difference in your business success and achieving your life's dreams of a successful exit. CEO Advisor, Inc. provides three levels of very affordable business advisory services that will impact your life tremendously, and we can provide a complete sale process upon your desire to exit your business.
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.
Investing in yourself will ensure you are making the best decisions and enables you to dictate your future and your success. Investing in yourself will add critical skills (remedy your blind spots) that will be the difference in far greater success. Investing in yourself and your business also enables you to increase sales, profits and the value of your business toward an exit and the largest payday of your life.
Different than investing in real estate, bonds or equities, investing in yourself is the key to your success provided you have the proper road map to achieve your goals. Don't go it alone - this may be the most important step of your life. Meet with a Business/M&A advisor to discuss the steps below, and to address the specific needs of both you and your company.
Here are 5 steps you can take right now that will pay tremendous dividends:
1. Strategic Direction Toward an Exit Strategy
The direction of your business is critical to your success. Now is the time to re-assess, strategize and review the year-to-date progress and make needed adjustments in your business. Growing 10% year after year is not a gauge of success, and certainly will not increase the value of your business. With a clear strategy and sales focus you will ensure success in 2025 and beyond. For 21 years, CEO Advisor, Inc. has helped CEOs create strategies for increased sales, profits and business value toward an optimal exit. Devise an Exit Strategy with a seasoned Business/M&A advisor as one of the most important steps of your business-related life.
2. Focus
If you are not sure where you're going, you will never get there. Focus on your highest priorities and document your priorities with target completion dates and who will accomplish them. Focus on what meets prospects and customers' needs, drives sales and profits, and builds value in your company. A business advisor that specializes in working with CEOs can be a tremendous asset to you and your company by working with you two hours every week plus performing hands-on work to achieve your goals.
3. Review the Numbers
Create key metrics in a Management Dashboard for your business that will clearly tell you if you are on track to achieve results, maximize profits and optimize the value of your business. This will provide easy to access information that is critical to success. Review your Financials and make sure to understand your Financial Statements thoroughly so you can address specific aspects of your business and make needed decisions based on your financials. Track these key metrics and financials monthly as a critical step in the health, growth and success of your business.
Defining and tracking these key metrics will substantially increase sales an profits, enabling you to make faster and improved decisions. CEO Advisor, Inc. regularly assists CEOs in setting up these key metrics in a Management Dashboard to drive success and can help you analyze your financials and provide feedback on how to maximize your profits and valuation.
4. Set Your Goals
Establish clear near-term and long-term goals for both you and your business. Create and prioritize major initiatives and deadlines around what is needed to accomplish these goals. Then, assign personnel, management or advisors to ensure timely completion of these initiatives and goals. This can be one of the best decisions you can make.
5. Invest in Needed Advice
The business issues above are just some of the more critical issues that you must tackle every day. The impact on your business, your life, your bottom line, your cash flow and the value of your business is tremendous. A trusted, seasoned Business/M&A advisor can be the difference in your business success and achieving your life's dreams of a successful exit. CEO Advisor, Inc. provides three levels of very affordable business advisory services that will impact your life tremendously, and we can provide a complete sale process upon your desire to exit your business.
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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