The financial health, viability and performance of your business are vitally important when determining its value.  There are many other factors, however, that affect entity value that aren’t necessarily detected in the historical financial performance of the business. While clean and precise presentation of the financial performance of the business is vital, these other factors tend to affect the multiplethat is applied to the earnings in the determination of value.

CenterPoint CFO assists business owners in “working a plan” to position their business for sale at optimum value and support them through the transaction process from the CFO’s chair.  We place equal emphasis on historical financial performance, future financial potential and quantitative value drivers.

In addition to an obvious focus on financial performance and earnings potential, listed below are twenty-five areas where we place value enhancement emphasis in our engagements.

1. Financial presentation – clean and concise historical financial statements
2. Financial and Operational performance assessment
3. Corporate entity review – legal structure
4. Analysis of “Optimum Value for Minimal Investment” (O.V.M.I.) for the business
5. Pricing and Costing analysis (typically a tear down and rebuild of gross margin)
6. Trailing twelve month financial analysis with metric and ratio identification
7. Comparison of key metrics and ratios to industry averages and identifiable competitors
8. Identification and focus on any “value gems” inherent in the business (intellectual property, trade secrets, coveted customers, niche security, etc..)
9. Current strategic and value plan – typically three years
10. Rolling twelve month financial projection (income statement, balance sheet, cash flow)
11. Financial projections of “status quo” and “upside potential”
12. Organizational review – develop an organization chart with detailed job descriptions
13. Engaged and fully competent Management Team; clearly defined compensation structure
14. Identify and address any key risks or dependencies of the business
15. Review all contracts and update as appropriate for impending transaction
16. Document all policies & procedures and map responsibility to organization chart
17. Complete “bullet-proof” due diligence package
18. Analysis of customer base & data (concentration, risks, contracts)
19. Analysis of vendor/supplier data (concentration, dependencies, contracts)
20. Develop clear understanding of industry activity, trends and movement
21. Involve CPA to develop tax planning model for the transaction
22. Involve investment advisor to insure a wealth transfer and optimization plan is in place
23. Minimize distractions so the business owner can focus on running and growing the business
24. Executive summary and Offering Memorandum preparation (or assistance for intermediary)
25. Personal Coaching relative to ‘putting the keys on the desk’

It is our firm belief that an effective sale is dependent on many factors.  Our goal is to explore and address as many of the unknowns as possible prior to the transaction in order to facilitate such a transaction as expeditiously and at the best value possible.

We would welcome the opportunity to discuss these value enhancement initiatives in greater detail to highlight the impact they will have on the multiple used to determine the value of your business.