On August 22, FBLI family members gathered at Marquette University to hear from Attorney Tom Kammerait of von Briesen & Roper, s.c. talk about “Maximizing the Value of Your Business.” The presentation covered a lot of useful information for members who are thinking of selling their family business or just determining effective ways to grow the value of it.
Highlights included: how to maximize the value of your business by understanding the factors that impact it such as developing a diversified customer base; clearly defining marketing objectives and sales methods (including how you are reaching out to prospects); whether or not you have a proprietary product or services, dealing with barriers to market entry; the strength and depth of your management team; and the strength of your balance sheet/access to capital.
Tom also talked about critical factors to valuation such as having your businesses processes and supply sources clearly and succinctly documented; as well as having an aggressive growth plan. Tom recommended a 15% annual growth goal that targets 5% organic growth, 5% new growth and 5% acquisition growth. In addition, he stressed the importance of having good insurance processes in place where you are isolating the riskiest parts of your business into LLCs and being proactive with your risk management.
Tom pointed out that having strong sales and marketing channels as well as indirect selling capabilities (such as being on boards and memberships in associations) are also critical to enhancing the value of your business, and that you need to have a management team that will be sustainable through a sale. Other things to consider include: having a plan in place for future capital expenditures; non-compete agreements for key workers; and a thorough understanding of the timing of you company’s business cycle.
Tom’s presentation went on to discuss how once you have an accurate valuation for your business, you can use it as a reference point to develop strategies to enhance its value. Finally, Tom offered a free initial consultation to any FBLI member who might be considering proceeding through this process.