How do I know if my business will attract interest from acquirers/investors?
Every buyer will have different criteria when assessing a target acquisition. These criteria range from specific financial parameters (for example minimum revenue or EBITDA levels) to strategic synergies (for example, your business offers a product/service that the buyer currently doesn’t).
Start by looking at your business as an acquirer or investor might see it, using all available data
With so many variables depending on your sector – and your specific area of activity – a great starting point is to look at your business as an acquirer or investor might see it, using all available data.
Information is key to any transaction type. A good corporate finance advisor, with deal-making experience in your sector, can provide you with granular analysis on your market, talking you through recent transactions in your space.
This can help you benchmark your business against other similar companies which have previously been acquired, analyse what factors influenced the price paid for those businesses, and understand buyer motivations in more depth.
The fundamental questions to explore are as follows:
- How do you perform against other industry KPIs (e.g. rates of growth, margins, revenue per staff member, proportion of revenue from contracts)
- Which areas of your business could be remodelled to improve margins, or what profitable new services could you provide to increase bottom line?
- Are sector-specific headwinds (e.g. consolidation or regulation) influencing valuation levels, and why?
- Do you need to invest in areas such as headcount, accreditation levels, IT infrastructure or staff training?
- Working on the principle that value increases with scale, is it time to implement a plan to achieve growth now, and then look to sell at a later date?
Looking at your company dispassionately with an ‘acquirer’s eye’ can help you build a much clearer picture of where your company stands currently in terms of strengths and weaknesses, and where you can add value in advance of a transaction.
View recent BCMS transactions