Value Builder Score

Maximize Value in Advance of a Sale

Most M&A advisors and business brokers focus on maximizing only transaction value. Transaction value can be maximized by combining an optimal financing and tax structure with a buyer.

Emerge Dynamics goes beyond maximizing transaction value to also maximizing a company’s intrinsic value in the months and years leading up to a sale. Both of these should be maximized to deliver the most value to the seller of a business.

More traditional paths to growing business value include:

• Grow Sales
• Cut Costs
• Acquire a Competitor

While these are certainly paths to increasing company valuation and can be successful, without a proper fit within a detailed strategic plan, each of these has led other companies to their demise when followed blindly. Buyers determine their offering price not only on the cash flows of a company, but also on the riskiness of those cash flows (valuation practitioners often refer to this as the Company Specific Risk Premium). By working with Emerge Dynamics as a long-term M&A advisor and exit planner, business owners have the potential to drastically increase the value of their firms before they sell. We help you increase both your intrinsic value and your transaction value. We conduct a detailed company analysis to identify company weaknesses and growth opportunities and then put together a formal strategic plan that we implement with you to increase your company’s valuation methodically before you sell your business.

We operate from our offices in New Orleans, LA to anywhere in the world. We conduct our in-person sessions with you, at your facility, anywhere in the United States, Latin America, Caribbean, Europe, Australia, or the Pacific Rim. When needed, dedicated time at your facility is committed in order to keep your company a path toward an increased valuation. Operating out of New Orleans, our M&A prep engagements often occur over multiple years as we work with you to increase your valuation.

Baby Boomer Retirement Phenomenon

There are over 350,000 companies in the United States with sales between $5 million and $100 million and 70% of them will attempt to transfer ownership by 2030. Unfortunately, 35%-40% of these transactions have historically failed or only happened because of undesirable seller price concessions.

While small business valuations continue to be stable, many expect there to be an increase in supply of small and lower middle-market businesses on the market as those in the Baby Boomer generation seek to retire. This increase in supply may lead to a decrease in valuations as more companies seek to be matched with the same amount of acquisition capital.

Business owners who have been methodically increasing their value and preparing for sale will have the highest likelihood of exiting their company at a time and valuation that suits their retirement plan.

Preparing to Sell Your Company

“Companies with identical cash flows can have drastically different values because of the riskiness of their cash flows – even companies in the same industry. Factors such as customer concentrations, vendor concentrations, excessive reliance on an owner, disorganized financials, lack of replicable processes, and many others can all lead to buyers perceiving a company as more risky and thus paying less for it.”

Most private companies have an opportunity to double their value over a 1-5 year period by adopting a disciplined, methodical approach to both reducing company-specific risk and increasing cash flow.

We identify as many risk areas as possible, assess them objectively, and dynamically link our assessments to the calculation of business value. We then use this process to methodically begin mitigating risk, thereby increasing value. This process increases value independent of any cash flow increases. However, a convenient effect is that when companies put into place systems which decrease their risk, profit usually also increases.

Emerge Dynamics will work with you to both increase cash flow and decrease the riskiness of that cash flow, thereby driving valuation higher.