Considering Selling Your Event Business? Find Out If You’re Buyer-Ready.
Are you building your business with a sale in mind? Find out if you’re building value in the right way.
For many people heading to sale, the language, the barrage of information and the volume of questions can make it feel like they’ve slipped into a parallel universe and yet at the same time they still have to keep their successful business on track.
If you’re considering a sale, here are a few factors that can help you get ahead of the process – making you a confident participant in what may be the biggest financial transaction of your life.
#1: Why a Buyer Wants You
If I’m buying your business, it’s because I think I can build on it and make a strong return on the sale price. I’m not buying it because you’ve ‘just had a great year’ or because ‘XYZ blue chip always attends/sponsors’. I’m buying it because I’ve seen evidence in your past financials that support the future growth plan and it all matches my own expansion strategy.
You’ll need to create an evidence-based sale narrative that demonstrates the company’s history of delivering growth along with market data that supports your future growth projections.
Sound obvious? Perhaps. But have a think about how you’re going to show this future vision to potential investors or buyers. Getting clean, accurate and compelling data together ensures you tell the right story of where your business has come from and how it will deliver future growth.
#2: Provide Evidence to Support Future Growth and Expansion
Remember, the valuation you’ll get for your business is based on what someone believes about its future and what it is worth to them.
The multiple – whether it’s 5 x EBITDA or 10 x EBITDA as with some historic pureplay deals (and there are examples of high value events selling at a much higher multiple) is based on a whole range of factors including niche, scale, consistency in performance, repeat business as well as the profit data.
Bear in mind that multiples increase when you have automatic payment models, valuable proprietary tech, and/or protected IP.
It doesn’t matter that you’ve had a great year and double the spex revenue if you’ve either had a patchy past few years or can’t show a compelling plan for how the business will grow in future: Your buyer wants to know that growth is a habit that’s built into your business’s DNA.
#3: Make It unique, or Prove It’s Dominant
There is limited value in a ‘me too’ business. Your buyer wants differentiated products, models or niche market portfolios in order to justify paying a premium multiple.
If you’re unique, how will you show that you’re managing the risk from future competition? If you’re dominant, how will you show that you’re protecting that top-dog position?
#4: Is It Repeatable, Is It Scalable, Is It Cloneable?
You need a strong story and a compelling narrative. Show the buyer your validation is bullet proof leading to strong launches. Show them that you’ve built annual events with a history of growth and they’ll be interested. Show them that you’ve cloned this platform in other sectors and you’ve got a really valuable proposition.
Get ready to demonstrate how your processes, systems, structures and resources all feed this repeatable capability.
#5: Is the Business Robust Enough to Navigate Change in Ownership?
What’s the story on management and future leadership? It’s rare that the seller stays on beyond two to three years post sale (after all, you’re probably selling your business as an exit). So your buyer will want to know about the strength of your team.
Evidence of this might include: a good level of staff retention, evidence of talented and ambitious individuals other than you who have strong relationships with the market.
Get in touch if you’d like to learn more about any of these view points and experiences.