Within the past year, the Australian market has seen more and more deals regarding equity, acquisition, divestments and many others. If you’re one of the business professionals that tries to undertake such a task, it’s very important to know whether your company is sale-ready or not. There are two main things to focus on here, which are business optimization and process readiness.

What is business optimization and why does it matter?

This includes all the steps you must take in order to boost the company value before you initiate any kind of deal. Done properly, this will help you boost the business capacity when it comes to debt or equity acquisition. The business optimization process will bring access to more acquisition targets, capital providers and you will have better terms in general.

You will notice there are 3 factors that will help you boost the value of your business. These are increasing growth, a high Return on Invested Capital and a low Weighted Average Cost of Capital. Although it’s obvious that growth plays a major factor, you do need to understand what business features need to offer the best ROIC.

A good approach to boost the ROIC values is to lower the working capital levels needed to offer business support. This will help release any cash that was initially tied up in the working capital. You don’t need to worry about the working capital being reduced too much. It will still remain at the levels required to offer business support.

It’s also very important to study the fixed capital structure of your business. This might help lower the capital costs. Even if it doesn’t have a major impact on growth and ROIC increases in high value areas, it can still boost the value of your business.

Process readiness

Getting the right deal terms is essential, and in order to do that you want to be sure that your company is ready to go through with that deal in the first place. You will notice there are a variety of factors to keep in mind during the process readiness phase. Hiring an experienced advisor can help you achieve that.

  1. It’s extremely important to study your financials and also offer all the information that acquirers or investors might need to know about your business. Showing historical performance can be a great way to showcase the value of your business, making it more attractive to customers. You can adjust the historical data to not show any non-business or non-recurring costs and tasks.
  2. Proper tax planning can help you lower the tax payment for the business sale, while also increasing the shareholder payout.
  3. It’s imperative to implement the right financial planning solutions that will help generate more wealth
  4. Appoint the right legal and financial advisors.
  5. Prepare a financial model or even a data book that delivers all the necessary materials needed for the transaction.
  6. Performing some due-diligence before accepting a deal is very important. You want to identify any risks related to the deal and see if they can be removed.
  7. Getting a legal advisor helps because he can manage or mitigate legal claims, protect your Ips, prepare the contractual arrangements and perform a variety of other similar tasks.
  8. See if the facilities, systems and equipment are all in line with the growth plans.
  9. It’s important to offer incentives to those employees that deliver great performance.
  10. Check the integration/separation issues and find ways to solve the problem. You also need to identify and analyze synergies that come from the deal.
  11. Assess your business value and then compare it to peers.

Preparing your business for an upcoming deal can be a long, challenging and sometimes tedious process. But it’s extremely important to go through that, since it will eliminate concerns and also ensure your business solves any problems that might arise before a deal. It just makes the investing/acquisition/sale process a lot smoother, with the return on investment being second to none!

Contact our firm directly to learn how AS Advisory’s award winning client service could help you or your business.