Valuation is another topic that I see is important for many owners. Can you explain why we see different valuations in company sales?

Valuation is a complex topic and will depend strongly on the strategic desire of the buyer. A foundation of value is the cash generating capacity of the business – the more cash the company can generate in the future, the higher the valuation will be. This point also reinforces the importance of having a good financial basis in any sale, even if the most exciting aspect of the company is its unique technology or products. At the same time, a baseline financial valuation will be adjusted by other factors such as strategic technology and IP, prized talent and expertise, key market and customer access, and the synergies that can be realised by the buyer.

The net combination of all factors is often captured in a simple multiple of either EBIT or EBITDA. The wide range of multiples seen in recent transactions reflects the different strategic value buyers place on different factors and emphasises the importance of a) understanding where synergies can lie and b) presenting the sale opportunity to companies who will place the highest strategic value on the selling company.

What final piece of advice would you give to company owners considering a sale of their business?

Owners of successful companies in the vision sector are of strategic interest to buyers and often the target of unsolicited strategic approaches. This is a good starting point, but to ensure a smooth process and successful M&A transaction, effective preparation is one of the most important factors together with commitment to a structured process. Early discussions with experienced advisers to understand company readiness for sale, strategic market appetite, and planning for a sale can be very valuable. As with all complex projects, understanding the aim, scope, and commitment to the end goal dramatically increases the chances of success.

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