Factors to be considered in assessing this risk include: â€¢ the dependency of the business on the promoters â€¢ sustaining the competitiveadvantage â€¢ intellectual property of the company â€¢ growth and profit trends & projections â€¢ business practices â€¢ culture and professionalism of the company â€¢ the market in which the business functions While there is something called “profit” and “risk” trade-off, the Ultimate factor that determines the value is the strategic position of a buyer.”Beauty is in the eye of the beholder”.
Factors such as economies of scale, Innovation of products and markets, market domination or even fast tracking of growth, can see particular buyers pay more for acquisitions than an accountant’s valuation.
It represents the opportunity to pass wealth to the next generation and beyond.
How can investments be structured to provide good returns but mindful of the risk profile of the family? How can the estate planning be properly structured to incorporate uperannuation, insurance, wills and trusts? A comprehensive wealth management strategy should bring together all of these components.
Importantly, like planning for the sale itself, it should not be left to the last minute. impacts on the host communities where they operate do not abruptly end when they close down operations and go home.
Rather, the way in which companies depart has a significant impact that can linger long after the mine or plant has closed.
The Last portion of the business plan is the exit strategy.
It may seem strange to develop a strategy this soon to leave the business, but potential investors will want to know the long-term plans.
Recent research study has shown that 40% of all small business owners would like to exit their business immediately – but that only 25% have any sort of plan for doing so.
A mere 7% of the people have a formal written exit plan in place – so although the desire is at the forefront of many owners’ minds, there is no strategy to make it happen.