• Tom Welsh
  • tom@welshcommercial.com
  • 303.808.8570
  •  
  • Tonie Krosky
  • Former MIP Product Co-Owner
  • tonie@tbkrealestate.com
  • 303.210.7336
  • TIP #1

    Demonstrate Strong Financial Performance

    Historical Financials

    • Consistent revenue growth (at least upward trend)
    • Recurring revenue is a plus
    • Strong operating margins
    • Increasing profitability
    • Importance of last twelve months

    Operating Cash Flow

    • Focus on hitting projected revenue and earnings numbers
    • Review net profitability of customers and products
  • TIP #2

    Maintain "Clean" Financials

    Audited or "Auditable" Financial Statements

    • Have your financial statements audited with a reputable firm to add credibility
    • Use GAAP accounting. If not, identify how practices differ from GAAP
    • Understand cash vs. accrual accounting - timing differences can be material

    Income Statement Adjustments and "Add-backs"

    • Buyers are skeptical of earnings that rely on substantial add-backs (one-time, non-recurring charges, private company expenses, etc.)

  • TIP #3

    Diversify your Customer & Supplier Base

    • Diversification signifies a healthy business and reduces risk
    • Buyers will pay less for companies dominated by one or two customers
    • Examine what % of sales your top 10 customers represent?
    • How stable are your top suppliers? How stable are their terms?
    • Do you have multiple suppliers for critical components/services?
    • What % of total purchases does your top supplier represent? Top-5 combined?
    • What % of the company's sales are related to a few key employees?

  • TIP #4

    Develop a Strategic Growth Plan

    • Maintain a clear strategy and be able to demonstrate your history of execution
    • Be able to articulate specific future growth opportunities
    • Position your company to take advantage of them

  • TIP #5

    Build a Capable Management Team

    • Invest in training and key strategic hires, if needed
    • Motivate management to add value to the company through a potential sale
    • Focus on building a deep management team that can thrive without your continued leadership
  • TIP #6

    Eliminate potential "Gotchas"

    (these are items that could result in significant discounts to value)

    • Maintain legal documentation (licenses, regulatory filings, contracts, intellectual property, incorporation, etc.)
    • Clear title to all assets
    • Document processes and procedures
    • Resolve legal disputes

  • TIP #7

    Build a Team of Qualified Advisors

    • Minimize distractions from running your business effectively
    • Get advice from professionals who have "done it before" and who have expertise in areas you do not
  • FINAL TIP

    Are you and your company ready if a buyer appeared on the radar?

    • Minimize distractions from running your business effectively
    • Get advice from professionals who have "done it before" and who have expertise in areas you do not