Building for exit (a.k.a. enterprise) value optimization is a great way to build a highly valuable business regardless of your interest in selling it or not someday.

Here is a relatively comprehensive list of areas to address in priority order to optimize exit value and build a healthy and thriving company.

Things that drive exit value:

  1. Reduce the risk for the buyer
    • The entrepreneur/CEO/Owner is redundant in the business
    • Powerful, healthy Management Team and Bench for key positions
  2. Revenue predictability and quality over several years…consistent growth in Revenue, Profit and Cash
  3. Show significant growth potential in current, adjacent and/or new markets
  4. Healthy culture, high engagement organization
  5. “Rembrandts in the attic” – Value beyond the financial returns – Value over discounted cash value
  6. Bring multiple buyers to the table
  7. Documented Systems
  8. Customer diversification
    • Have no one customer that is more than 10% of total revenue/profit
  9. Protect your IP (Intellectual Property)
  10. Dashboards and KPI (Key Performance Indicator) visibility
  11. Make the books squeaky clean – taxes, receivables, short and long-term debt, etc.
  12. Clean records with good data
  13. Clean up facilities, if applicable
  14. HR compliance
  15. Tighten up ALL Agreements
    • Solid employee agreements,
    • Solid vendor, supplier, technology, customer, agreements,
    • Partner legal agreement,
    • Real Estate agreements, etc.
  16. Address any pending or active lawsuits

How have you built your company’s value?

 

  • Dave Baney is the founder and CEO of 55 Questions, LLC. “ We work with successful top executives with a driving ambition to crush their competition.” We help CEOs and Entrepreneurs improve alignment, communication and accountability throughout their organization. 55Questions.com
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