Maximizing your company

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While that relationship may well havebeen affected, another importanrt area that has been impacted has been privatr institutional investment – in particular, the eagernes of private equity funds to enter into transactions, and the valuationm that an institutional investor might assign to a This is because private equity firmsa often augment their equity investment with bank debt in order to maximize the returns to their shareholders. If credit conditions make it more difficult for these firms to raise deals areless common, with the ultimate resulg of a lower valuation for a company if a transaction is beingy contemplated.
If owners or managementy of any company are anticipating a saleor capital-raising event of this type at some point, how can they ensure that the valuatioh is a favorable as possible? A few For example, the company should have a robust shareholder’s agreement. This is a very basic, but key, part of any corporatw documents. It addresses issues such as the rules governing salesof shares, composition of the board of directorsd and other matters. A corporate attorney with experience in addressint these specific matters shoulddrafy it.
If you have not had competent counsel review theswdocuments recently, it would be money well spent: An ouncse of prevention here can mitigatr huge problems later. Any law firm with a business law practicew should be able to assistf in a matter such as It should go without saying that if your accountingb records are inpoor condition, it will be extremelyu hard to support any sort of attractive In fact, in this market, many firmsw will simply pass on a deal where the financial records are This is simply because there are enough other deales out there where this is not an issu that an investor will just move on to thosse deals.
Any company that has any reason to believes that it will be looking to raise outside capital – debt or equity – should have appropriat accounting controls and procedures in If the company does not possess the internal expertise to implement thesew controls, any competent CPA firm should be able to As an end result, management should look to put in placd a process that resultsa in audited financial statements. If management can articulatee and defend how the company will achieve its growth goald for the next coupleof years, it will have a major impact on valuation.
This includes concrete saled goals, executable plans to achieve those goalsd and infrastructure rollout to support Even though growth right now mighttbe minimal, if management can credibly demonstrat e how it will addressd this issue, it can make a very significan difference in how the company is viewed by an outsidd investor. By preemptively addressing thesed issues, management seeking outside investment can make their companhy more attractive and help support a more compellinvg valuation from the perspective ofall