Recently, you made the biggest and most difficult decision in your career; you decided to exit your business. More than that, you decided to sell to a professional business buyer.
We understand this probably wasn’t an easy choice. You might have entertained the idea of passing your company to your children or trusted employees. But, as our team at Generational Equity makes clear at our executive conferences, the best way to secure the long-term legacy of your business (and your financial future) is selling to a committed buyer who can take your company to the next level.
But, now you’ve made that tough decision, it’s time to establish your true business valuation and growth potential. Of course, you want to attract the maximum bid for the hard work, time and money you put into your company. But, achieving that optimal return doesn’t happen overnight.
That’s why we recommend your first step is to recast your company’s financials. Like most business owners, you may have under-reported earnings to reduce taxes over the years. This is perfectly legal and par for the course. But when the time comes to exit, this means you might misjudge the true value of your company. By recasting financial statements, you show buyers the true profitability of your business.
In practice, this is where an expert will cast a keen eye over your company’s financials in recent years to reinsert any earnings or expenses along the way. This will help establish your true business value. Don’t confuse this for manipulating your finances to mislead potential buyers – their detailed due diligence process will uncover any attempts at this.
Instead, recasting will reexamine your finances to provide an accurate and promising picture to buyers. Don’t forget – they are interested in your business’s potential growth under their direction. So, it is important to ensure you aren’t selling this short by recasting (normalizing) your financial statements.
Let’s apply this approach to a company’s EBITDA (earnings before interest, taxes, depreciation and amortization). As we have highlighted in past pieces, EBITDA is used by buyers as a gauge of business worth. Using this number allows them to compare several investment opportunities and determine which is the most promising.
Many aspects included in EBITDA can be recast for a more accurate picture of your company’s value. These include:
This is just a small sample of the financials you should analyze and recast to establish the true value of your business. Without this, you risk undervaluing or overvaluing your business when heading into market – either way, you won’t get the price you deserve for your dedication to your enterprise. Recasting your statements will take some time and effort (especially if you don’t use the guidance of a professional M&A advisor), but this is time well spent to ensure a precise valuation.
It is important to seek the support of a professional M&A firm to get an accurate company valuation. This is where our skilled advisors at Generational Equity can help. Not only will we provide a comprehensive account of what price your business would command in market, but we’ll also discuss techniques to increase that value over time AND place your company in front of the right buyers.
If you’d like to learn more about the importance of recasting and how our team values a company, you should attend one of our executive conferences. These are completely complimentary (apart from a few short hours of your time) and provide a detailed analysis of the M&A process, giving you the perfect launching pad to confidently exit your business.
Find out when we’re in your area and together we’ll create a legacy that will last for generations.
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 2 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.