Over the past few weeks, we’ve covered the importance of cash flow over enterprise value (EV) in detail.

But now let’s say you’re looking to sell your business.

This week’s post is all about getting you the highest possible valuation.

Here’s how.

Work through this list of questions below—in detail from start to finish.

That’s it. It really is that simple.

Let’s get into it.

The 12 Questions to Maximize Valuation

#1. How long have you been in business?

A longer operating history tends to get you a higher valuation.

#2. What is your competitive advantage?

Making the answer to this question as obvious as possible to a buyer is just as important as having one in the first place.

#3. Why are you selling your business?

Any prospective buyer is going to ask you this question during the due diligence phase. Having a satisfactory answer ready will give potential buyers more faith in the fundamentals of the business.

#4. How much time does it take to run?

The more automation you’ve already created, the better for the buyer.

#5. What size is your business currently?

The size of the business is critical intel for allowing a buyer to better understand what they’re getting into. The best way to answer this one is to have the following information at the ready: Revenue, team members, real estate, assets, inventory, etc.

#6. How profitable is the business?

You’ll fetch a premium valuation if you can sustain above-average profitability for your segment.

#7. Do you have a strong balance sheet?

Having little to no debt will put you at a huge advantage here.

#8. Do you have revenue-related risk?

If more than 10% of your revenue comes from a single customer, a buyer can see that as concentration risk.

#9. What owner risk do you have?

If you are necessary to run the business, your valuation will be directly affected. The more systems you have in place for the business to run itself the better.

#10. How clean are your books?

Easily one of the most overlooked items in a business sale is a clean transition of the accounting process.

#11. What are the known growth opportunities?

Point out future opportunities to prospective buyers. Don’t wait for them to connect the dots themselves.

#12. How has the business typically grown?

If your past growth has come from a repeatable source, the buyer will be more confident in the business’s future.

There you have it—the 12 questions that’ll maximize your valuation.

If you’re looking to sell your business and need some help, feel free to reply or shoot me a DM.

Putting It All Together

Here are your top takeaways from this week’s post.

1. This list of questions will get you the highest possible valuation if you’re willing to find the answers and optimize for them.

2. Generally speaking, the following will lead to a higher valuation: a longer operating history, having an obvious competitive advantage, a good answer as to why you’re selling, some automation already in place, above-average profitability, little to no debt on the balance sheet, clean books, obvious growth opportunities, and past growth coming from a repeatable source.

3. On the other hand, the following factors tend to lower your valuation: a high degree of revenue concentration and owner risk.

Hungry for More?

1. Follow me on Twitter and LinkedIn for daily content to take your business to the next level.

2. Shoot me an email with your questions or requests for what you’d like me to write about next.

‘Til Next Time,

Connor