This isn't a particularly fun topic to post about and it will definitely cause some upset but it's important for many owners to be self aware and to manage their expectations so they can take steps to course correct: Time served in a business DOES NOT equal E.V.
I've come across an increasing amount of owners looking to sell who are under the illusion that length of tenure should be directly proportional to the enterprise value of their company. Just because you have been running it for many decades doesnt automatically mean you are adding millions to the price of it.
The harsh truth is the market doesn't care about the time you put in, it cares about the application of that time.
- Have you built something where you as the owner are the bottleneck, or does the business run smoothly without significant input?
- Is the business providing a higher return on capital then if an investor simply allocated that cash to the stock market?
- Does the business have a track record of growth, or have the last few years stat accounts been flatlining?
- Are any of the repeat customers contracted to use your services for a period of time, or are they using you because you are the cheapest?
It's never nice to hear that the business you have put so much time and energy into isn't worth what you think it is (spoiler alert, over 90% of the owners I talk to have inflated perception of their EV) but the market is the one that will ultimately decide what the company is worth, not the current owner.
If you want to maximise the value, you have to make sure the right value levers are being pulled. If you don't know what those are then please reach out to me and I can help you understand where potential buyers are likely to discount their offer within your business and where they are going to pay a premium.
