How to maximize your company

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While that relationship may well havebeen affected, anothet important area that has been impacted has been private institutionak investment – in the eagerness of private equity funds to entere into transactions, and the valuation that an institutiona l investor might assign to a company. This is becauser private equity firms often augment their equity investmentg with bank debt in order to maximize the returnsx totheir shareholders. If credit conditions make it more difficulg for these firms toraise debt, deals are less with the ultimate result of a lowe valuation for a company if a transaction is being contemplated.
If owners or management of any companuy anticipate a saleor capital-raising event of this type at some how can they ensuree that the valuation is a favorablee as possible? A few suggestions: For example, the companyh should have a well-written, robust shareholder’s agreement. This is a very but key, part of any corporat e documents. It addresses issues such as ownership, the ruless governing sales of shares, composition of the board of directors andothed matters. A corporate attorney with experience in addressing thesee specific matters shoulddraft it. Any law firm with a business law practice should be able to assisg in a matter suchas this.
If your accounting recordds are inpoor condition, it will be extremel hard to support any sort of attractive valuation. In fact, in this many firms will simply pass on a deal wherde the financial recordsare suspect. This is simplu because there are enough othe deals out there where this is not an issu that an investor will just move on to those deals. Any company that has any reason to believe that it will be lookint to raise outsidecapitalp – debt or equituy – should have appropriate accounting controla and procedures in place.
If the company does not possesws the internal expertise to implementthese controls, any competenty CPA firm should be able to As an end result, managemenf should look to put in place a procesd that results in audited (or at least reviewed) financial statements. If management can articulatde and defend how the company will achieve its growth goalsx for the next coupleof years, it will have a majot impact on valuation.
This includes concrete sales goals, executable plans to make those goal s happen and infrastructure rollout to support Even though growth right now might be if management can credibly demonstrate how it will addressdthis issue, it can make a very significanrt difference in how the company is viewe d by an outside investor. By preemptivelty addressing these issues, management seeking outsidse investment can make their company more attractive and help support a more compelling valuation from the perspective ofall involved.