You’ve worked hard for years to build a brilliant reseller business – but what’s your exit strategy?
In the channel, acquisition is more often than not a way for the bigger players to grow.
And that means a trade sale is likely to be your route out.
So, if one of them came calling, how attractive would your business look?
Sure, the fundamentals have to be right. The product, the brand, the scale and the profitability all have to have a big tick.
However, there is one crucial area that often gets overlooked: billing.
Whether selling is on your more long-term roadmap, or whether you are already way down the line, nailing your billing is way more important than you might think.
Here, Kevin O’Brien, Chief Financial Officer at leading billing software provider Union Street, shares his top five tips on how to maximise your value come sale time…
1. Expert partnership
“To grow a business effectively – whether for sale in a short time frame or a longer play – you need to have a consistent and stable billing provider. Ideally, one that owns its own software and can therefore respond and adapt to your specific business needs. There is also huge value to be derived from a consultative approach. Getting the right guidance at the right time from an expert billing partner with lots of acquisition experience ensures that any transaction delivers maximum value. That kind of partner, which knows a business inside out, is also able to help potential buyers highlight opportunities for future growth.”
2. Clean Data
“Accurate cost centres and tariffs, alongside predictable and dependable supplier/customer information contribute significantly to what a business looks like. Clean data demonstrates to a potential buyer that a business is well-managed and there is a low likelihood of inheriting problems and liabilities down the road. Those prospective buyers want to see that accurate bills go out on time and they want to be certain that the process is efficient and reliable. Evidence of that alone has the power to add value to a business. The great thing is that data can be cleansed at any point in just a few days. It’s about knowing what to look for and how to fix it. Again, an expert partner can quickly resolve those issues.”
3. Revenue Maximisation
“Acquirers value a target business by calculating a multiple of its revenue or profit, so it’s critical that nothing gets missed. Are tariffs correct? Are they routinely checked? Are cost changes regularly applied? Also, what about cash flow and debt management? Are you collecting your cash on time? Your revenue might look great, but do you have bad debt issues? If you’re getting billing right because you have a smart and efficient billing platform, it is easy to prove real revenue. Many of our customers are engaging proactively with us on this and, together, we are finding significant missing revenue. That is of course great news for them in and of itself, but when it comes to calculating the business’s value for the purpose of sale, finding an extra five percent or so of revenue can make a huge difference when a multiplier is applied. Don’t leave anything on the table!”
4. Compliance
“The most valuable asset for any business is its data, and regulation of that data plays a huge part in any acquisition. It’s crucial to a potential buyer that a business can demonstrate that it takes data security seriously and that it satisfies all of the relevant legal and data protection requirements and, ideally, is ISO-certified. Having a well-known and trusted billing partner with a solid reputation for robust information security management gives a business added credibility when it comes to compliance issues and reinforces its value.”
5. Post-Sale Success
“In the case of a Union Street customer, if a potential buyer is already in the industry and not using our market-leading billing platform, it is an attractive, cost-effective and quick way for them to move across and begin to gain the advantages of doing so. If they are already a Union Street customer, we can take the pain out of the integration of the two businesses. Lean on our experience to ensure a smooth transition and gear your business up for future success. Our knowledgeable team has completed over 25 migrations of all sizes and complexity so far this year. It is also another value-adding element, all of which contribute positively to the calculation of that all-important final sale number. It is all about demonstrating to a potential buyer that your business ticks all of the most important boxes. And they don’t come any more important than billing!”
To learn more about how Union Street can help your business maximise its value – no matter where it is in its lifecycle – visit Union Street.
