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How to Maximize the Value of Your Business for an Acquisition Transaction

Updated: May 17, 2021

Selling a business at the maximum possible value, may seem difficult and daunting. It is however, certainly not an impossible task, provided we fully understand what drives the value of a business and then present our business to the potential buyers/investors in a best possible fashion. In other words, with proper planning & execution, achieving the goal of maximization of value is not necessarily a very difficult goal.

First thing which we need to understand about business valuation is the fact that it is not exactly a science. In practice, it is more of an art than science.

Fortunately however, there are proven models and frameworks that could drive valuation to maximum levels and lead to successful M&A deals. This article is intended to help provide some guidance to companies as well as entrepreneurs that are contemplating a sale of their businesses. Reading through should add to your understanding of what are the primary and secondary valuation drivers in a M&A (mergers & acquisitions) sale process.


What is the M&A process?

The mergers and acquisition ("M&A") process is a transaction between the owners of companies and their constituent assets and the investors i.e. the buyers of a business. It comprises a range of activities that involve strategy, valuation, negotiation, and the combining of corporate assets with the intent of upholding and increasing business value.

Unlocking the drivers of value

To understand this at a very basic level (which actually is the most important level), we can begin by looking at the the DCF (discounted cash flow) growing perpetuity formula to unlock the fundamental drivers of value.