Updated: Feb 10
Eliminating perceived risk helps avoid onerous earn-outs
Company owners are accustomed to an element of risk; however acquirers are risk averse when faced with funding an acquisition. Reducing perceived risk is paramount to a successful sale of your business.
Acquirers are attracted to all forms of guaranteed future income to offset perceived risk. Recurring revenue, such as maintenance contracts, royalties, subscriptions, SaaS, leasing or recently renewed long term contracts add value to a business and reduce risk for the acquirer.
There are many other factors which reduce perceived risk adding value for the acquirer such as; improving financial transparency, reducing debt levels, liabilities, customer and supplier vulnerability and the list goes on.
Most company owners prefer to avoid prolonged earn-outs post completion especially where a percentage of the consideration is contingent on achieving sales or profit targets post acquisition. If a business is perceived to be reliant on the departing owner, reducing owner reliance will help avoid onerous earn-outs post completion. (See also 'Leadership Transition')
When you mandate exitbydesign, we work with you to reduce perceived risk, highlighting what's best about your business. Should perceived risk prove to be an issue, our fees can be paused while potential risk is reduced.
Call us on 01384 274 778 / 075 888 925 88 to discuss or go ahead and book a free consultation to explore your options.