Ad Astra Equity
Since not every business is ready when the owner is considering a transition, we will advise our clients to put the process on hold so that we can work together to increase the value prior to exploring exit opportunities.
These value enhancement strategies can range from a couple of months to several years. However, depending on the scope and size of the practice, business value can increase immensely.
Value Enhancement strategies
Understanding the business at hand and the industry it operates in is key for future investors/buyers. The investors/buyers will want to make sure that the business has room to grow. Considerations you will want to consider as you continue to grow the business and/or look for new areas of growth for the investors/buyers to undertake can be expanding current service/product offerings, entering into new markets, acquiring competitors, or signing on more customers. Have you asked what additional services/products would my customers want? Are there competitors I would like to own? Where is the current industry trending towards? Can I get a jump and offer those services/products today? Ad Astra is here to help you consider new areas of growth not only to help increase the value of your company, but help future investors/buyers envision where they can take the business.
How does the business financials compare to the industry norms? Under or over performing? Is the business GAAP compliant? Our team will take the time to understand how your business compares to others, where it is excelling vs where it is under performing. Then we help you formulate a plan to mitigate the under performing areas so that we can work towards the goal of increasing value and improving the business financials. While it sounds like a daunting task, sometimes it is just analying the business and making a few tweaks here and there.
Often one of the most overlooked areas for majority of our clients, how does the business perform from an operational perspective? Is the owner running the show, or is there a strong management team in place? Are there processes and procedures in place and defined for future employees to pick up on and/or improve with new technologies? Does everyone understand their responsibilities and who they report to? When new investors/buyers look to acquire your company, they may not want to be the one running the show. They might want to depend on the management team to perform the daily activities. We will work with you to define/improve these areas if they are not already defined. Not only will these activities increase the value, it will help the current owners have more time to themselves.
How many days does it take to collect your money? How many days does it take to move inventory? How many days does it take to complete a job or produce a product? We look at the business from a ratio perspective, understand where the business sits compared to the industry and competitors. This will help us pinpoint key areas where the business under or over performs. Then we get to work on the why and how we can help it improve.
How does the business compare to industry norms? What about from a National, State, or Local level? Is the business in a niche industry? What are the barriers to entry? Is the business dependent on new technologies within the industry? Who are the governmental regulation agencies? How are past and future regulations effecting the industry? We need to understand these questions because it will help determine where the business is compared to the competitors and how the business is adapting to the industry.
Every business in the world is facing increasing costs as time progresses, but are you increasing your prices? If not, why? Increasing your prices, even a little bit, will go a long way with increasing profits and cashflow. Among increasing prices, we help you understand your profit from a service/product, customer, and market perspective. This will help you determine where it makes sense to focus your efforts.
Do you have a large customer that accounts for majority of your revenue? Or vice verse, one large supplier? These are key areas of risks for investors/buyers because if they lose that customer or supplier, it could be detrimental to the business. We work with you to mitigate so that if you lost a customer or supplier, you wouldn’t have sleepless nights.
How are you letting your prospective customers know about your services/products? We often hear “word of mouth” from a lot of our clients. While that can be a viable method to keeping the business at its current level of revenue and profitability, it will be tough if you want to grow the business. We work with you to understand what your current marketing efforts are, identify where your prospective customers “hangout,” then address if there can be improvements.
Selling your business is most likely the largest investment decision you will ever make. We offer a unique agreement for our clients so that they are 100% comfortable knowing that Ad Astra is working in their best interest at all times.
Since we know our clients deserve the best of the best, we offer the following characteristics within our agreement:
- Success-based fee only. This means that you, our client, will not pay any upfront retainers, monthly fees, or cancellation fees.
- Non-exclusivity. This allows you to market yourself with buyers that we have not identified to you.
This structure gives our clients a risk-free arrangement knowing that we will only be compensated if there is value given in return – a successful transaction.
We are easy to work with
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How you sell your business determines your legacy. Be ready for when that day comes.
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