Business Owners

Business Grooming

Clarity understands what drives the ultimate selling price for a manufacturing business. We apply this understanding to help groom companies for enhanced value.

One guiding principle for this work is the notion that strategic buyers can generally justify a higher price tag than other buyers. Many business owners work with the flawed belief that their business will simply sell for some multiple of revenue or profit. It is much more constructive to consider who would want to buy your company. By defining the likely buyer types, the business can be groomed to suit the interests of targeted buyers. This may mean shifting resources to develop a certain segment of the business or adjusting your selling methods and channel strategy.

Another guiding principal is that more free cash flow means more value. Many business owners focus too much on top line revenues or sales growth. While this may be very attractive for certain buyer types or situations, most buyers focus on the true projected cash flow, including tax implications. The Clarity roster includes Six Sigma black belts and Lean Manufacturing experts. We can work with your company to define high impact process improvements and then drive implementation to get the job done. This business improvement will help prospective buyers to justify a valuation that shows a continuation of your proven cost reduction track record – bolstering their future cash flows analysis.

Personnel considerations are another factor. While some buyers will welcome an investment opportunity that does not come loaded with an expensive management layer, most buyers will prefer to see continuity of management. If you anticipate a 100% buy out and swift exit from the business, this framework may limit your range of suitors. This may require some development of your management team.