Despite the challenges faced by most businesses over 2020, transaction multiples have remained surprisingly unaffected by Covid-19.
In some instances, where a business has been able to demonstrate an effective management response to the pandemic, and present credible recovery plans, company valuations have increased above pre-pandemic levels.
Whilst the appetite for M&A has not waned over the last 12 months, there has been a notable shift in the allocation of risk to sellers by way of more rigorous due diligence, novel earnout structures and stringent non-negotiable seller warranties. This has eroded bargaining positions for acquirees and equally increased uncertainty on the final value of an agreed transaction.
To ensure that business owners are not at a disadvantage during any future sale negotiations H&Hendricks recommends allowing at least two years of planning and preparation ahead of tendering potential suitors. This time must be spent wisely with particular focus on:
- Mitigating potential due diligence risks;
- Management succession planning; and
- Optimising business performance.
H&Hendricks specialise in helping business owners to increase the value of their companies and prepare for sale. Even if you are not currently considering selling your stake, there is often significant scope to maximise your company’s value, increase profit and cash generation, and improve its overall attractiveness to future buyers.
Simply finding out what your company is really worth is often the first step to ultimately realising its true value.
Maximising Value By Design™