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How to Increase the Value of Your Business for a Sale

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As you look into the future, the day may be approaching when it is time to sell your business. If so, naturally your goal will be to get the most value out of your life’s work. But the price your business will fetch on the market is reliant on many factors, some of which – like the economy – you simply cannot control.

That’s why you need to maximize influence on the aspects of your business’ value that you can control. You need to put your company in a position to reach peak value before you sell, and to do this you need a trusted partner who has been through it all before.

Through the cumulative experience of the sell-side advisors at Merit Investment Bank, we have compiled the following list of key techniques and areas of focus for business owners looking to increase the value of their business before selling.

1. Get Your Financials In Order, In Detail

You may be used to financial statements that contain only high-level information, but in order to get top dollar for your business, you also need to be able to show the nitty-gritty numbers clearly.

Rather than simply seeing a summary of how much your business earned in a specific period, a potential buyer is going to want to see how this money was earned. Each stream of revenue should be broken down into segments so potential investors can see the myriad factors that drive profits.

Merit Investment Bank recommends having an independent audit performed by a CPA. Our advice is to get this done well in advance of a potential sale date, so underlying issues can be addressed before they become obtrusive obstacles. Nothing satisfies a potential buyer’s concerns more than a report from a respected third-party auditor.

Paying a CPA to do a deep dive into your books can be expensive, but in our experience, the expense is worth it to make your business more attractive to blue-chip buyers.

2. Address Any Existing Customer Concentration Issues

Customer concentration is when your business earns more than 20% of its revenue from one customer. This does not bode well for future potential earnings, as the risk of losing this customer (and a significant part of the company’s revenue) is far too high. 

Righting this ship can take years, which is why it is important that you address these issues early on. If, however, you find you do not have time to fix the issue (as you’re selling your business in the near future), have no fear. Buyers are willing to invest in companies with customer concentration issues. Just understand that this may lower your valuation. 

3. Assemble A Solid Management Team

This is particularly important if the owner is transitioning out of the business. The business should not be dependent on the owner’s personality or customer relationships. To avoid this, assemble a management team that will have the power to make decisions and systemize the day-to-day operations. That way there are fewer hiccups as the owner transitions out. 

4. Consider Your Contracts And Compliance Practices

If your business has long-term contracts with customers or suppliers, make sure that these contracts can be reassigned to the purchaser of your company. Also, ensure that you’re adhering to all regulations (think HR and OSHA compliances). Keep in mind that all buyers will require at least a clean Phase 1 Environmental Study by a third party. 

5. Create A Strategic Plan For Growth

Any buyer wants to know that their investment is well-positioned for future growth. A strategic plan for growth can reduce the buyer’s risk, which, as a result, can increase your company’s value. 

6. Get An Outside View Of The Steps You Need To Take

One of the most difficult parts of selling your business is taking a step back to determine what steps are needed to increase your company’s value. Developing an unbiased view can be a real challenge for an owner who’s been associated with his or her business for a significant time. That’s where an investment banker comes into play. Investment bankers can offer you a different look into how best to position your business for sale.  

1. Immediate Post-Closing Actions

  • Confirm Closing Deliverables: Verify wire transfers, escrow deposits, and payoff letters. Ensure all signed documents are stored and circulated appropriately.
  • Communications: Issue press releases and internal announcements. Host internal debriefs to clarify deal implications and next steps. Share FAQs to address employee and client concerns.

2. Financial & Tax Considerations

  • Tax Planning: Review capital gains implications and possible elections (e.g., 338(h)(10)). Optimize allocation of proceeds among trusts, estates, and investment vehicles.
  • Wealth Management: Establish an investment strategy for sale proceeds, factoring in liquidity, diversification, and risk tolerance. Revisit estate and philanthropic plans.

3. Operational Transition

  • Integration Roadmap: Define Day 1, Day 30, and Day 100 milestones. Align IT systems, compliance, and reporting frameworks.
  • Governance & Management: Clarify new reporting lines, identify key management for retention, and set up transition service agreements where necessary.

4. Employee Retention & Culture Integration

  • Retention Programs: Offer stay bonuses or performance incentives to key employees.
  • Culture Alignment: Host integration workshops to harmonize values and workflows between merging organizations. Use pulse surveys to monitor morale and engagement.

5. Customer & Partner Management

  • Customer Retention: Conduct proactive outreach to major clients to reassure them about service continuity. Offer transition incentives if needed.
  • Supplier & Partner Relations: Reaffirm contracts, introduce new leadership, and mitigate potential disruptions in the supply chain.

6. Legal & Compliance

  • Ongoing Obligations: Track escrow releases, earnouts, and indemnification timelines. Update registrations, licenses, and insurance policies.
  • Dispute Preparedness: Maintain a documentation log and standardized process for handling any post-closing disputes.

7. Long-Term Strategic Planning

  • For Sellers: Outline reinvestment strategies—whether in new ventures, passive investments, or philanthropic initiatives.
  • For Buyers: Execute synergy realization plans and monitor KPIs to measure integration success. Refine strategy as market conditions evolve.

8. Key Deliverables for Merit Investment Bank

  1. Post-Sale Communication Playbook – For employees, customers, and press.
  2. Tax & Wealth Planning Roadmap – Personalized for sellers.
  3. Integration Milestones Tracker – With Day 1/30/100 progress indicators.
  4. Retention & Culture Alignment Plan – Ensuring people continuity.
  5. Escrow & Earnout Monitoring Checklist – For legal and financial oversight.

Merit Investment Bank as a leading boutique investment bank is focused on entrepreneurial middle-market companies. Merit Investment Bank Executes sell-side M&A, buy-side M&A, and capital advisory services, debt and equity capital raises, corporate finance, and valuation services.

Securities offered through Finalis Securities LLC Member FINRA/SIPC. Merit Investment Bank and Finalis Securities LLC are separate, unaffiliated entities.

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