Why should a buyer pay a premium to acquire your business? Buyers don’t want to pay premiums; they want to buy great companies as inexpensively as they can. You’ve spent years building your business and now you want to sell it for a price commensurate with the value you’ve created.
The best way to earn a premium for your business is to prove to buyers that your business is worth it, by demonstrating:
- A strong brand and respected reputation. This is especially true in the aerospace and defense industry supply chain, where no one ever got fired for buying a legacy brand, but they could get fired for buying a new entrant to the market.
- High barriers to entry and high switching costs that protect against customers taking their business elsewhere. For example, changing suppliers on an aircraft model with an FAA approved Type Certificate typically requires a Supplemental Type Certificate, which is a long and expensive process.
- Established customer relationships in aerospace and defense can often give buyers confidence that your customers intend to stay with you long into the future, emphasized by proven records of high quality, on time delivery and superior service.
If you want to sell your middle market aerospace and defense company for a premium, make sure your deal team understands the competitive nuances of this industry so that they can help you successfully communicate to the buyers why your business deserves a premium.
Have a great day everyone.
Managing Director, Aerospace