Valuation

What the greatest technology investors say about Valuation

How to Maximize the Selling Price

Basil Peters angel investor and Principal Strategic Exits Corporation

 “There are several ways to maximize the final selling price [exit value]: 1. Structural value increase  2. Illuminating strategic value 3. Capitalizing on Inefficient Markets  4. Maintaining multiple bidders 5. Sales and negotiating skill.    

Structural value increase often [] can increase the final selling price by 10 to 15% [and] can be balance sheet changes, asset vs. share sales [etc.]. 

Illuminating strategic value [] often creates the largest fundamental increase in selling price.  It’s not actually creating strategic value, it usually has to be there already. [It] very often has to be illuminated for the potential buyers [].

Capitalizing on inefficient markets.  Markets for selling a business, especially for under $100M are very inefficient:  Information is difficult to access, there are [few] buyers, the market is illiquid [and] often very few[are] for sale [] [which favors sellers]. 

Always have multiple bidders [] to improve the probability of closing [and] to maximize the price. [Three is optimal.] 

Selling and negotiating skill [] can increase the final price by 50% or more.

[] When the exit process is well planned and professionally executed[,]  the exit date and exit valuation are both reasonably predictable.”  Basil Peters, Maximizing Exit Value, Angel Capital Association Annual Summit Workshop Apr. 15, 2009;  http://www.basilpeters.com/Presentations/Maximizing_Exit_Value_20090415_Part_2.pdf-  pg 18-25