Potential sellers often ask us “how do I sell my business for a higher price?” As you might imagine, the answer to that question is complex and involves a variety of factors. Still, in the middle market of the aerospace and defense industry, it boils down to advance planning on specific key points. Here are the fundamental issues an owner should address:
- Show solid financial results. Past year EBITDA, a recent history of growth and profitability, and sound projections will drive the price up as buyers reach conclusions about future performance and determine the value.
- Explain why your niche of the industry has a particularly strong outlook, citing recognized experts who support your viewpoint. If challenges loom on the horizon, acknowledge them and indicate how you will respond.
- Articulate a logical, well-supported strategic plan for the company based on a deep understanding of your customers and competitors. Pointing to specific actions taken in the past several years that yielded positive financial results will build credibility (and value) in your plan going forward.
- Showcase a talented and stable management team that reflects a diverse mix of experience with a track record for strong financial results. Capable leadership is always a plus in price calculations.
- Have audited (or minimally, reviewed) financial statements to reduce buyer concerns over the integrity of financial data. Quality of Earnings reports can help if past financials are at lower standards, but this is a less preferable alternative.
- Demonstrate adherence to best-in-class business practices such as planning, budgeting, continuous quality improvement, executive reviews, performance reviews, and internal process audits to show the business is being professionally managed.
These are the types of items we focus on with clients who utilize our Long Range Sale Planning (LRSP) service to build value in anticipation of a future sale. As we have learned over our 22 years of experience selling middle-market aerospace and defense companies, if you want a premium price for your business, there is no substitute for having premium fundamentals.
Have a great day everyone.
Managing Director, Aerospace