In this deep-dive article, we share insights from Dr. Willem Keijzer, Managing Partner at CNX Transaction Partners, on the top 5 business aspects you should focus on if you want to sell for a good price.
In this article...
Read time: 3 minutes
As a business owner, one question often looms large: How can I increase my company's value?
Dr. Willem Keijzer, Managing Partner at CNX Transaction Partners GmbH, provides insightful answers in a recent interview with podcast host Sammy Gebele.
In this article, we delve into Wim's guidance, breaking down his expert advice into 5 practical steps.
According to Wim, buyers scrutinize 3 critical elements when evaluating a business: Future cash flow, growth potential, and stability.
Understanding these elements will help you present your business in the most favorable light. Think of it like this: What cash flow can you generate from the company in the future? What is the growth of it? And how stable is it?
It's that simple.
If you want your consultancy to be more valuable in the future, you have to act now. So what steps can you take today to make more money in the future?
Here are the 5 most important facets of your business you should improve if you want to sell for a good price.
Positioning your firm strategically in the market is essential. If you have a clear market position—if you're well positioned in your market against your competitors—you have a strong competitive position. This often results in good fees, which increases the value of your consultancy. Therefore, a clearly defined position in your market against competitors can lead to increased revenues and a higher valuation.
Thinking outside the box can be a game-changer for your firm's revenue streams. During his interview, Wim suggests, "Instead of just selling your time, you can also look at how you can sell value." He cites a case of a professional services firm that shifted its business model from charging hourly fees to taking a cut from the savings they helped clients achieve. This model offers a win-win solution, demonstrating value to clients and boosting revenues simultaneously.
Consistent revenue is a key metric for potential buyers, and there are ways to ensure this beyond conventional methods. Wim advises, "You could also look at, for instance, fixed prices, to really build products and sell these products instead of just selling your time." Fixed pricing models and product development can offer a steady stream of income, thereby enhancing your firm's value.
A diverse client base provides stability and growth potential, further increasing your firm's attractiveness to potential buyers. Diversifying your client base reduces the risk associated with losing any single client and provides multiple avenues for growth.
Wim cautions against the trap many businesses fall into: becoming overly dependent on their founders. A high-value business should operate smoothly with or without its founder. As you grow your business, look to build processes that decouple the founder from the success of the business.
Remember: Enhancing your professional service firm's value is not a task you should embark upon a few months before selling. It's a strategic and ongoing effort that you can start today.
Follow these tips from Wim to increase your business value and attract premium buyers, ensuring a profitable exit when you're ready to move on. Remember, your firm's value lies not only in what it has achieved in the past but also in its potential for future growth, stability, and cash generation.
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