If you are planning on selling your integration business in the future, what are the things you can do today, to drive the maximum valuation?
M&A activity in the integration industry has been rampant over the last few years. Solutions360 sees both a size and scale play driving these acquisitions, coupled with an industry that has owners wanting to sell. As a result, we do not expect integrator M&As to slow down any time soon.
In a previous episode, we defined the internal and external factors that impact the valuation of your company. These are the factors that a potential buyer will look at to determine the value of your business.
On today’s episode, Brad Dempsey and Joel Harris continue that conversation, and drill down on the internal factors. These are the things you can control that will drive maximum valuation for your integration company.
“Internal factors are all about taking risks out of my business. The more risk I eliminate from my business, the more my business is worth.” Joel Harris
3 internal factors that drive maximum valuation for integrators
1. Show steady earnings
You don’t want earnings to bounce all over the place, even if they are, on average, in an upward trend.
2. Higher growth rates equal a higher valuation
Historical growth rates are not a bad thing, but you are selling the future growth of your business, not the past.
3. Demonstrate sustainable growth
This is important because a buyer wants results that are going to be just as predictable as under new ownership. We will talk more about this in a future podcast, but this includes building out an executive leadership team and putting processes in place that enable an integrator to create a sustainable business.
Also on the podcast –
What are some of the things that should cause concern when you’re looking at an integration company to acquire?
Even if you are not interested in selling your integration business, this podcast is for anyone wanting to run an integration business with long-term profitability in mind.