Make the most of your company’s valuation.

You’ve already decided to sell your MSP business. What is someone willing to pay for it?

There are a number of factors that influence the value of your business to potential buyers. One is what is their need for your business. Is their purchase financially motivated? Or is it a strategic decision?

Financially-motivated buyers will tend to focus primarily on the financial performance of your business when they are preparing their offer. Gross revenues, profits and cash flow are key, but unfamiliarity with MSP business models that include recurring revenue may lead to a lower, and frankly unacceptable, offer.

Strategic buyers will value an organization differently. They are looking to enter or control a certain target market or niche, or take advantage of a new or emerging technology. Your business may have geographic importance to them as part of their big picture. Their decision will also factor in your company’s recurring revenues and agreements into long-term profitability. Another factor to consider is that the potential buyer may be looking for a business that can continue to run on its own without you being there or the new owner’s involvement.

The decision to buy your company will in part be based on the products and services you offer, the infrastructure and systems you have in place, and the strength and loyalty of your management team and staff. Potential buyers are looking for stability in these areas. They’ll also place greater value on your company if you can demonstrate profitability, growth in sales, and a diversity in your customer base and revenue streams.

So how can you make your business more attractive to the right buyer? One of the key ways to raise the valuation of your business is to have a strong company culture, a solid management team in place, and a team of skilled, loyal employees. This speaks volumes to the strength of your company and its ability to retain its customer base over the long term.

On the financial side of things, you will need to have your business subjected to a period of due diligence.

“Depending on the complexity of the transaction and documentation required for final valuation, due diligence can take from 20-60 days. This allows MSP Corp to do a deep dive into your business and ensure that we’re a good fit.”

Jason Dacosta, Founder and President, MSP Corp

Some of the information you’ll need to provide includes at least three years of bank statements, certified financials and tax returns. You’ll need to supply current accounts receivables and accounts payable, as well as a listing of employee compensation and benefits. The potential buyer will want to see a list of your fixed assets and inventory, as well as any property or equipment leases, insurance policies, licenses, and any copyrighted, trademarked or intellectual property belonging to the company.

MSP Corp understands that you’ve worked hard to build your business and you want to protect it. With a mission to be a world-class business partner for MSP owners across Canada, we actively seek to acquire and partner with owners looking to secure the value of the business they have built and provide a seamless exit process that ensures business continuity and employee and client stability.

Contact us today to learn more about selling your business and maximizing its value.