The Importance of a Growth Story When Selling Your Company

Selling a business at maximum value requires more than the standard housekeeping of providing historical financial information and addressing buyer’s due diligence requests. It also requires a focus on the company’s next chapter, showing buyers how company performance can reach the next level with the additional resources that come from an acquisition or partnership.

The buyer that pays the highest price is often the one who sees the most growth potential from the acquisition. Because of that, efficiently articulating a company’s growth opportunities is critical to maximizing value, even for companies that have not traditionally focused on growth or do not have any immediate plans to pursue growth.

Often overlooked are the available growth opportunities that the current owner may not be inclined to pursue (e.g. given the capital investment required) but a new owner may seriously consider (and be willing to fund) such as:

Expansion: Into new products, services, or geographical markets

Growth: In existing products, services, and markets requiring additional key hires

Acquisitions: To consolidate fragmented industries, realize synergies, or add new capabilities

Substantiating the Story

It is one thing to list several growth opportunities. Even more effective is illustrating the financial impact of such opportunities to help a buyer translate the opportunities into an increased purchase price. Adding “meat on the bones” of growth opportunities with financial estimates, even if the price is just indicative and preliminary, will help force the discussion on what it all means for the purchase price.

As part of any sale transaction mandate, Capital West – IMAP Canada focuses on preparing financial models and other materials that demonstrate the upside value potential from key growth opportunities. Having an experienced M&A advisor to manage the complexities of a transaction process, including optimal positioning of growth opportunities, allows business owners to do what they do best – focus on running their business and continuing to deliver robust financial results.

ANDREW KEMPER
Partner
Capital West - IMAP Canada