Increase the Deal Value Every Time

A classic gap that brokers see in many potential listings is the chasm between what the seller believes their business is worth or what they say they “have to get” and the market value that a sane buyer would be willing to pay.  Here in resides a major opportunity to “Close the Gap” or at least minimize it to the point the seller will be satisfied with the transaction value you can get for them.

The major problems that are driving down the Market Value of a seller’s business include: 1) Owner Dependence Risk; 2) Financials are not clear, nor organized and there are too many claimed add-backs; 3) Other family members play too key of roles; 4) Quality of Earnings – Not provable, serious doubt in repeatability, what will they be without the owner & family involved; 5) Customer Concentration Risk – Too much of high margin sales comes from too few customers; 6) Supply Chain Concentration Risk; 7) Limited Perceived Upside; 8) Marketing & Sales are not Predictable; 9) Trends are not positive; 10) Many others.

What can we do as a TABB Ecosystem or Deal Team to solve these problems and increase the Deal Value Every Time?  The market reality is that for most deals that get done, the timeframe from the day you engage the prospective seller to the day the transaction is completed is 9 months or more.  When we choose to bring our Collective Resources to the table, there is a tremendous amount of progress we can make in that 9-month window to make Sustainable Improvements in the business. 

As a Deal Team, we have the Combined Capability to Implement and Document these Sustainable Improvements including: 1) Increase or multiply the Profit through a Profit Multiplying Framework; 2) Install a predictable Growth Chassis to create consistent Lead Generation at an Optimized Cost per Lead, Double the Conversion Rate, Amplify the Repeat Business, Increase the size of each sale with new and existing customers; 3) Clean up and organize their financials to increase credibility & trend reporting; 4) Install a General Manager immediately to start proving sustainable management capabilities and transferring key relationships of Team, Customers & Supply Chain to them; 5) Use the Marketing Machine & Sales Engine to go get new sizable customers to reduce Customer Concentration; 6) Install a full set of Key Performance Indicators (KPI’s) to measure results and track progress to increase Quality of Earnings; 7) Create “How To” Manuals in the business to increase predictability & sustainability of future success; 8) Develop Processes & Systems across the organization; 9) Create a “Future Upside Map” for prospective buyers to review; 10) Get the Owner out of the day-to-day.

A recent example is an HVAC company in Dallas where over the listing period the “Provable, Repeatable Earnings” increased by over 25% and the business sold for $3.5 million instead of the original listing price of $2.5 million. A question for you, the broker…What would you do with an extra $100,000 in commission from having your deal value increase by a million dollars or more?  Let’s work together to create a WIN-WIN-WIN!