Why You Need a Valuation to Achieve Maximum Value in an Exit

At ACT Capital, we perform a preliminary valuation for our clients before we take them to market. While there are many methods used to value a business, we focus on the approaches buyers take when looking at an acquisition. 

By taking a buyer’s perspective, and determining a reasonable valuation range, we keep all parties on the same page and the exit process on track. To the buyers, our sellers seem well-informed and realistic, which is key to us bringing in as many acquirers as possible.

Here are the primary reasons a valuation will help you achieve an optimal exit.

1. Positioning and Strategy: Knowing your business’s worth can better position it for a strategic sale. This includes making improvements or adjustments to increase its attractiveness and value to buyers.
2. Credibility: A well-documented valuation lends credibility to your asking price. It demonstrates to potential buyers that you clearly understand your business’s worth and have done your due diligence.
3. Informed Decision-Making: Understanding the true value of your business helps you make informed decisions during negotiations with potential buyers. It gives you a solid foundation to justify your asking price.
4. Highlighting Strengths: The valuation process can highlight the strengths and potential of your business, which you can emphasize during the sales process to maximize value.
5. Identifying Weaknesses: A valuation can also reveal weaknesses or areas for improvement that could be addressed to enhance your business’s market value before proceeding with an exit.
6. Stakeholder Buy-In: For the other stakeholders in your business, a valuation provides a basis for assessing the return on investment and potential risks, making them more likely to buy-in to your exit strategy.

For those considering a sale or merger, valuations are indispensable for setting fair prices, attracting buyers, and ensuring transactions reflect true business value.

Strategies for Getting the Best Deal Possible

To maximize company value, sellers should maintain and demonstrate operational excellence and adapt strategies based on market dynamics. 

• Do Not “Take Your Eye Off the Ball”: Continued focus on operational excellence is critical, even amidst valuation and sale processes. 
• Adapt and Evolve: Businesses should remain agile, continuously adapting to market changes to maintain appeal to potential buyers. 
• Use Competitive Processes: Bringing multiple parties to the table can enhance potential value through competitive bidding. 
• Avoid the single buyer. A single buyer vying for your business is negotiating from a position of power. At ACT, we prefer to leverage multiple buyers competing for your business and then structure a deal that maximizes your return. Learn more about our competitive Auction Process here. 
• Leverage Expertise: Engaging with seasoned M&A advisors can bring nuanced insights into maximizing valuation outcomes.  

Valuation combines art and science, requiring market insight and strategic focus. Optimize your business’s value and attract the right buyers with expert guidance.  

In fact, 68% of the businesses we’ve worked with have sold above their initial valuation expectations, with those exceeding their valuation expectations doing so by an average of 84.94%. 

Request a business valuation today to get the process started. 

About ACT Capital Advisors  

ACT Capital Advisors is a premier mergers & acquisitions firm representing lower to middle-market companies across all industries. ACT has a 40-year history of deal-making, closing 250+ transactions, and unlocking over $2.5 billion in wealth for its clients. For more information, visit https://actcapitaladvisors.com/.