The effect of strategy on exit valuation is one of the most challenging concepts for investors and entrepreneurs to intuitively understand. I didn’t ‘get it’ until I was fifty. It’s not that I am slow to learn, it’s just that, like a lot of things in life, it takes a few dozen experiences before the [...]
Maximizing Value
The market for selling a business is very ‘inefficient’. This is one of the reasons a well designed and executed exit can easily increase the business valuation by 50% or more. The best way to illustrate this is with a counter example – the residential real estate market. Most of us are familiar with selling [...]
The public markets provide much better data to illustrate the 50+% increase in business valuation that can be realized when you sell a business. This increase in value is much more familiar to public market investors, in part because the increase in price is so easy to see. In the public market vernacular this is usually referred to [...]
Companies are sold not bought Many entrepreneurs think that when their company is ready to be acquired, a buyer will knock on their door and make an offer. This does happen, but less often than someone knocking on the door of your house asking to buy it. Even if an unsolicited offer does come in, [...]
Another reason a well designed and executed exit strategy can increase the business valuation by 50% or more when you sell a business is the ‘strategic value’. The only reason any company buys another company is because they believe: they can increase the value of the company being acquired, and/or the acquired company will increase [...]
