Your Financial Roadmap

“The toughest opponent you’re ever going to face is in the mirror.” – Rocky Balboa

Each layer of understanding how-to sell your business adds to the anxiety and pressure of a “once-in-a-lifetime” event. However, a properly prepared plan and the right team standing beside you will make the process smoother, shorter and beneficial. We often talk about taking ‘chips off the table’; as a business owner much of your net worth is tied to the business itself. Strategic and financial buyers looking at your business are rolling the dice on future performance under their governance.

Why have a Q of E?

A QofE is a forward-looking perspective based on adjusted past performance. This assessment of earnings more accurately reflects operational efficiency or inefficiency, analyzes historical revenues and expenses, sales and major customer concentrations and expense add-backs prepared by our team. When you sold your last house, did you have a home inspection performed? Why? Wouldn’t you rather uncover and address any issues ahead of the actual sale relieving additional stress by knowing that any lingering concerns were addressed?

OR…

Would you rather have an interested buyer, someone you don’t know, hire an outside party and pay them to find bad news about your business where they can reduce the original offer price?

What Is It?

Quality of earnings represents a clearer picture of your company’s true financial health  Stepping into likely your largest financial transaction, having an independent analysis of your normalized, sustainable earnings built around adjusted EBITDA is THE ticket to stay and not just a ticket to play. It rebuilds the earnings number from the underlying records, strips out anything that isn’t a recurring part of normal business to see the actual run-rate a new owner would inherit. This concept is crucial for potential buyers to see the real from the illusion, anomalies or one-time events that can skew earnings.

A QofE is a forward-looking perspective based on adjusted past performance. This assessment of earnings more accurately reflects operational efficiency or inefficiency, analyzes historical revenues and expenses, sales and major customer concentrations and expense add-backs. It’s an investment that will typically reward the proactive seller with an additional turn or two. This value-add estimates the future performance of your business, which strategic and financial buyers are looking for under their governance.

The seller has an opportunity to correct discrepancies, develop explanations and analyses, and get an honest look at their business from an outsider’s perspective. Knowing the in’s and out’s of your financial results is critical to a successful outcome. Time kills deals – is a legitimate cause and effect as delays compound themselves. A buyer’s job is to identify, evaluate and minimize ALL risks. The last thing you need are snags and issues giving the buyer ammunition to delay, reconsider, renegotiate and possibly walk away. Performing a QofE and the necessary preparation increases certainty to close on time with fewer bumps along the way.

Identify, evaluate and address potential tax risks, remediate any exposures and confirm historical tax compliance, thus reducing pitfalls in the sale process. Issues that aren’t addressed before talking to buyers will rear their ugly heads during due diligence causing delays and potentially killing the deal. Tax planning will also help a seller anticipate the after-tax proceeds by giving you a leg up in negotiating the deal.

Your QofE will weed out buyers looking for an easy deal. Opportunists will have a more difficult time competing against serious bidders attracted to a serious, prepared seller. By deciding to complete a QofE, the seller’s commitment to close the deal is unmistakable. With more offers on the table, it will be easier to pick out the best offers with the best buyers.

There is power in knowing you’re surrounded by a team of certified valuation professionals who have performed the due diligence and can defend the numbers. When the buyer’s due diligence team looks for discrepancies, they’ll have a difficult time disproving the figures provided by your QofE. You are now in a stronger position to answer any questions. The expected valuation, backed by a QEof, will be justified and lead to a smoother exit with less strings attached.

Areas of Expertise

We were frustrated by slow turnaround times, high costs, and generic reports with superficial insight. Our solution was to bring experts in-house. Our financial experts go beyond self-reported financials, providing a customized, in-depth analysis tailored to your acquisition needs. Your QofE provides a thorough review of historical revenues, expenses, sales trends, customer concentrations, and expense add-backs, all crucial for making informed decisions.

Start the Process with a Free Consultation

Let’s talk about your unique situation. A free consultation to discuss what you may be looking for regarding your valuation needs. You’ll engage directly with our Senior Executives and will experience an organized and secure data collection process when you choose to move forward

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