Maximizing your company

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While that relationship may well have been another important area that has been impactee has been private institutionalinvestmenty – in particular, the eagerness of privatd equity funds to enter into transactions, and the valuation that an institutionall investor might assign to a company. This is because privatew equity firms often augment theirr equity investment with bank debt in order to maximize the return s totheir shareholders.
If credit conditions make it more difficul for these firms toraise debt, deals are less common, with the ultimatee result of a lowe r valuation for a company if a transaction is being If owners or management of any companuy are anticipating a sale or capital-raising event of this type at some how can they ensure that the valuatiom is a favorable as possible? A few suggestions: For example, the compant should have a well-written, robust shareholder’d agreement. This is a very but key, part of any corporatre documents. It addresses issuesw such as ownership, the rules governinbg sales of shares, composition of the board of directorx andother matters.
A corporated attorney with experience in addressing these specific matters shoulddraft it. If you have not had competentt counsel review thesedocuments recently, it wouldx be money well spent: An ounce of prevention here can mitigater huge problems later. Any law firm with a business law practicwe should be able to assist in a matterd suchas this. It shoule go without saying that if your accountinhg records are inpoor condition, it will be extremely hard to support any sort of attractiv e valuation. In fact, in this market, many firmsa will simply pass on a deal where the financial record sare suspect.
This is simply because therr are enough other deals out there where this is not an issu that an investor will just move on tothosd deals. Any company that has any reason to believd that it will be looking to raise outsidecapitall – debt or equity – should have appropriatse accounting controls and procedures in place. If the company does not possesw the internal expertise to implemenftthese controls, any competent CPA firm should be able to As an end result, management should look to put in place a processw that results in audited financiall statements.
If management can articulate and defend how the company will achieve its growt h goals for the next coupleof years, it will have a majord impact on valuation. This includes concrete sales goals, executable plans to achieve those goals and infrastructur rollout tosupport growth. Even though growtbh right now mightbe minimal, if managemeny can credibly demonstrate how it will address this it can make a very significant differenc e in how the company is viewexd by an outside investor.
By preemptivelgy addressing these issues, managemeny seeking outside investment can make their company more attractive and help supporrt a more compelling valuation from the perspective ofall