3 Tips to Maximize Your Business Valuation

3 Tips to Maximize Your Business Valuation

Written by Andrew Rice, CPA, CVA, Managing Director of Trout CPA’s Transaction Advisory Services

When it comes to selling your business in a merger or acquisition (M&A) transaction, getting the best valuation possible is likely your top priority. But how can you ensure that you're maximizing your business's value in the eyes of potential buyers? Here are three tips that can help you secure the best possible price for your business:

  1. Know Your Financials. One of the most important factors that potential buyers will consider when valuing your business is its financial performance. Therefore, it's essential to have GAAP-compliant financials before entering into an M&A transaction. This includes clearly understanding your revenue, expenses, and profit margins, as well as any potential risks that could impact your financial performance in the future. While audited financial statements are ideal, a sell-side Quality of Earnings (QoE) eliminates surprises and packages the financials as buyers want to see. By presenting well-organized, accurate financial data, you'll increase the confidence that buyers have in your business and its value.

  2. Build a Strong Management Team. This is typically the most challenging endeavor to execute. In the lower-middle market, specifically, owners often have a disproportionate level of importance in the day-to-day operations of their business. Buyers need to be comfortable that the show will go on when the company changes ownership (assuming the seller-owner is exiting shortly thereafter). Accordingly, buyers are looking for businesses with a solid management team. If you're able to build a strong, experienced management team that can demonstrate a track record of success, it can increase your business's value in the eyes of potential buyers. This can also help mitigate any concerns buyers may have about key personnel leaving the company after the sale.

  3. Identify Your Unique Value Proposition. Finally, it's important to be able to articulate your business's unique value proposition clearly. The best companies all have an "edge." What sets your business apart from competitors? What makes it valuable to potential buyers? By identifying and highlighting your unique strengths, you can differentiate your business from others and increase its perceived value. This could include things like a proprietary product or service, a strong customer base, or a unique distribution network.


While there's no such thing as a guarantee in M&A, taking these steps will put you in the best possible position to achieve a favorable transaction outcome. As the saying goes, control the things you can control, and the rest will take care of itself.


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