IS YOUR BUSINESS WORTH 3.5 – 4% OF ASSETS?
DOES IT MAKE SENSE FOR YOU TO PAY 3.5 – 4 X TRAILS?
To recognize value one must understand what is valuable. What facets of the financial advice industry are more valuable than others.
The key is to understand the strengths of your business and the weaknesses. Knowing the strengths will tell you what your business may be worth to another business or what to expand upon. Knowing the weaknesses will allow you to improve your business or stay away from purchases that only increase what you do not want.
What is your Business Model? The key to understanding your business and potential buyers you have to know your Business Model and what is working for you.
All recurring revenue is not created equal. This sounds so basic but it is almost always overlooked when buying or selling.
Know the demographics of your clients. This is important for almost every serious business decision you will make. There is a PERFECT BUYER /SELLER for every demographic.
Know the part(s) of your business that is the most valuable. This will help you identify potential PERFECT BUYERS / SELLERS.
Your business is worth more selling in pieces than selling all at once. If you have a diversified stream of revenue – it will be worth more selling the different streams (or at least bidding up the different streams!) to different PERFECT BUYERS.
Are you a Generalist or a Specialist? If you are a Specialist with a clearly defined process and a transferable skill set – you are a PERFECT BUYER / SELLER. Your business is worth more and you can pay more. If you are a Generalist you may want to acquire businesses or concentrate growth on the most valuable part of your business.
What is your business’s value? What direction do you want to improve? Do you have questions? Give us a call.