A valuation inventory is must-do — no matter the exit strategy timing

Monitoring value is essential in any economic environment, but especially when the market is moving fast. Although the pandemic slowed Florida’s business sales in 2020, the number of business owners looking to sell began to climb at the start of this year and has continued to grow, according to Green & Co. Business Brokers. Even if an owner isn’t ready to sell, most want to maximize the value of their business. Ideally, business owners and their management teams should begin monitoring value at least five years before considering an exit.

Most people assume valuation is a quantitative science focused solely on financial statements, forecasts, multiples and rates of return. But it’s often more qualitative.

Valuation is a determination of future business expectations. To accurately determine those expectations, it’s critically important for a business owner to identify and understand what drives value. What factors increase cash flows and reduce risk? We believe these seven factors, which apply to most businesses, are essential to increasing cash flows and reducing risk — thereby enhancing overall company value.