A valuation for exit planning is the first step in assessing if your client is ready to transition out of their business or if they need to focus on a deliberate value creation plan.

As a platform focused on helping business owners and entrepreneurs alike close the delta between their current market value and their target value, we've compiled five tips that will lead to a successful valuation of your client.

#1: The more detail, the better

The more detail you provide to answers during the questionnaire process, the more likely Value Scout be able to capture the actual value of the business. Three factors that drive value are earnings, growth, and risk. By providing the necessary amount of detail to the questions posed, the more accurately Value Scout can assess these factors, and in turn, evaluate the coveted question of "what is my business truly worth?"

#2: Take the time to understand your financials during the process

Assisting your client and their team requires knowledge of their financials. During a valuation, we assess your client's business from both a qualitative and quantitative perspective, with both of these assessments influencing each other. There is a chance we will need to perform valuation adjustments derived from our analysis of your client's financial statements and answers provided to financial questions. In doing so, understanding the meaning and "story" of assets, liabilities, and expenses is of utmost importance in answering financial questions.

Coach your clients on the importance of understanding the nuances of their income statement and balance sheet. This can be done with your assistance or the finance or accounting team (internal or external) that your client uses.

#3: Set realistic deadlines

Your client's a business owner, and free time can be sparse. There is always something on their mind, or something they could (or should) be doing. Combine this with all the input needed from them to get a valuation done, and it may seem more like a chore rather than a value-added service.

To make this process as stress-free as possible, consider setting realistic deadlines or goals for each stage of the process.

Below is a potential template you can share with your client to make the valuation process as easy as possible.

  1. Week 0-1: Onboarding, begin collecting financial statements, tax documents, and other data requests to be uploaded to Citrix ShareFile. Upload documents by the start of the following week.

  2. Week 1-2: Work through the questionnaire. We suggest working on the questionnaire over multiple days. Given we urge clients to be as detailed as possible, the last thing we want you to do is to feel pressured and, at worst, burn out!

  3. Weeks 2-3: Relax! A trained Value Scout analyst will leverage the Value Scout Platform to conclude the valuation. Here, the baton is passed to us; we'll get the job down and reach out for any clarifying questions.

Setting deadlines throughout building out your annual and quarterly plans can be just as important and beneficial. Be realistic, but also hold yourself and your team accountable. Value creation is hard, but planning can mitigate the difficulty and set your team up for success.

#4: Coach your client on the purpose of getting a valuation

The purpose of an exit planning valuation should be the first step in assessing a potential exit. By coaching your client to get a valuation done, they can determine if the current market value of their business fits their financial and lifestyle goals.

Business owners often predict a much higher valuation than what we conclude to. This comes as no surprise. However, by coaching your clients on the potential outcomes, you change the mindset from potential disappointment to a philosophy of urgency and motivation to create enterprise value and close the value gap.

#5: Exit or Grow

As hinted at above, there are two outcomes after getting a valuation done for exit planning:

  1. Exit

  2. Continue to grow

In the perfect world, your client's financial goals and lifestyle can be supported by the opinion of value during the analysis.

The reality, however, often proves the contrary. But this isn't the end-all-be-all, and luckily for your client, Value Scout provides the resources and expertise to help them close the value gap. Our platform is centralized upon valuation and value creation principles that provide your client with the tools to create enterprise value in their business to close the gap and be successful.

Want to learn more about Value Scout? Schedule a demo today!

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