corporate finance 29 Building value in your business


Any corporate finance adviser will tell you that now is perhaps not the best time to contemplate selling your business, writes Tim Wallbank of Whitley Stimpson


The continuing financial uncertainty hanging over the Eurozone, the slow return to growth of our own economy, the lack of funding available to the SME sector are all factors contributing to the low price multiples we see being paid for businesses that do change hands – low, that is, by comparison with the heady ‘boom’ years last seen in 2006 and 2007.


Thames Vally ad 135x188:Thames Vally ad 135x188 8/11/11 12:55 Page 1


But – life goes on. If you are an owner/manager looking to retire, or move on to new pastures, then you may have been hanging on grimly since the start of 2008, waiting for better times to return. Unfortunately, there are few if any pundits willing to give odds on that happening anytime soon.


Multiple Harder to influence, but here are


So, if you are going to ‘bite the bullet’, there are still things you can do in your business to make it more saleable and attract a premium price.


There are many factors that influence the price of a business, but most price negotiations start with a simple calculation: profit times a ‘multiple’, where the profit is the sustainable bottom line of the business and the multiple is what the market is prepared to pay in your particular sector.


Given enough time, you can influence both sides of this equation.


Profit


• Carry out a review of overheads and then drive through cost reductions so identified.


• Clearly identify any exceptional and non-recurring costs.


• Carry out a margin review (against the competition).


some of the main drivers of value on that side of the equation:


• Management team: absolutely key in most transactions. Are there any gaps? If you are a retiring managing director, is there someone ready to take over your role?


• The USP (Unique Selling Proposition) of your company – nurture it. Work out what it is – a brand name, intellectual property, high barriers to entry? If it is excellent service, build on it (by customer satisfaction surveys, staff training, and good marketing). If it is product based, use good R&D and customer feedback to stay ahead of the game.


• Contractual income: it may not be possible, but if you can make your sales line that more reliable, it will have an influence on the value of a business: can you offer more maintenance contracts on your product range, for example?


Space does not permit me to cover a host of other measures, but if you


Tim Wallbank


would like a free consultation, see details.


Details: Tim Wallbank 01494-448122 07805 869030


tjw@whitleystimpson.co.uk Offices in High Wycombe and Banbury


INVOICE FINANCE//STOCK//P&M//TRADE//PROPERTY


You build the business. We’ll build the confidence.


The flexibility and expertise of an independent, together with the strength and extended product range of its parent, Bank Leumi (UK) plc, make a winning combination.


Specialising in structured ABL facilities up to £25m with exceptional levels of client service. Manufacturer of laminated


timber boards required flexible funding to assist growth Leumi ABL provided


£5m ABL facility + £4.44m from Bank Leumi (UK)


Manufacturer of metal roofing and


building envelope systems required ABL package to support BIMBO. Leumi ABL provided


£5.75m CID facility


+ £0.75m stock finance + £0.35m plant finance


To find out more about the Leumi ABL approach to business call Jonathan Hughes on 07584 630762 or email jhughes@leumiabl.co.uk or visit www.leumiabl.co.uk


Brighton London Birmingham Leeds Manchester Reading


ABL multi financial award winners 2010


ALTERNATIVE FINANCE PROVIDER2010


ASSETBASEDLENDER OF THE YEAR-UK, 2010


ABL FIRMOF THE YEAR-UK, 2010


ABL FIRMOF THE YEAR2010


THE BUSINESS MAGAZINE – THAMES VALLEY – DECEMBER 11/JANUARY 12


www.businessmag.co.uk


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