Top 12 Attributes that drive a premium valuation during exit...
Rick Briggs, Managing Director of Consilium Partners a Boston-based investment investment bank that provides clients with buy-side and sell-side merger/acquisition and capital -raising services recently gave a talk at a Tech Talk Tuesday event hosted at our Emerging Enterprise Center and moderated by our very own David Pierson.
Rick focused mainly on the role of investment bankers through the exit process, the importance of planning for the exit and having competent and knowledgeable counsel through the exit process. His slide on the top 12 attributes that drive a premium valuation for a company during exit really caught my eye and with his kind permission I share these with you...
Top Twelve Attributes Most Critical to Attaining a Premium Valuation For Your Company:
- Record of consistent revenue growth, with outlook for continued growth in the future
- Strong and improving margins (especially mature companies)
- Diverse customer base with absence of big concentrations
- Defensible industry niche(s)
- Continuous investment in R&D / new product development
- Complete and well functioning management team, with clear succession plan
- Ownership participation among members of mgmt team and key staff
- Rigorous internal financial controls; complemented by quality independent CPA
- Minimal ‘private company expenses’ and / or non-productive assets
- IP well documented
- Well-maintained facilities with up to date production equipment; legacy environmental or product warranty issues well addressed
- Corporate structure friendly to stock and asset buyers
To drive home the point, Rick's accompanying graphic below shows the surprising spread of valuation even among sophisticated institutional buyers. If you want to see that magic offer on the far right (in terms of $$) or get the offer that has the most value for your company it makes sense to involve professionals early in your exit process.
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