Getting Buyers to Pay for Future Results

Premium buyers seek to acquire businesses that will enhance operations and contribute to future growth

Valuation is driven by future value

  • While understanding the past performance of a business is an important step to framing valuation expectations, buyers are ultimately paying for the future cash flows of a business.
  • Combining business judgment with sound market analysis to derive reasonable financial projections is therefore critical to achieving maximum value.
  • In negotiating valuation, a seller should:
  • present the strategic and financial merits of the proposed transaction
  • convince the buyer of the future cash flow potential of the business
  • quantify the resulting revenue and cost synergies

Premium buyers value acquisition opportunities based on future cash flow potential

Use market analysis to support financial projections

  • Utilizing sound, current and credible market research is important to supporting the future cash flow potential of a company.

Utilizing sound, current and credible market research is an important first step to developing credible financial projections.

Build a five year pro forma financial projections model that buyers will have confidence in

  • Utilizing defensible and realistic market assumptions in the context of a combination with the buyer as well as quantifying related synergies will allow the seller to convince the buyer of the value proposition of the transaction.
  • Addressing future market penetration, revenue growth and cost savings opportunities is an important component to maximizing value.

Sunbelt understands the dynamics that drive valuation discussions

  • With decades of collective experience, Sunbelt’s representatives have considerable experience in conducting rigorous market research and analysis to effectively market and position your company.
  • We are experts in helping companies develop sound, defensible financial projections that will serve as a key component in negotiating for maximum value.