PSIJanuary2019

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Especially with all the uncertainty of today’s political climate, how ‘saleable’ is your business? Preparing for your exit PSI’s resident business expert Jim Rathbone advises how you could prepare for exit with eight drivers that optimise business value specially with all the uncertainty of today’s Epolitical climate, how ‘saleable’ is your business? If you would like to have the choice of selling in the future, consider eight key factors buyers have in their minds when purchasing a company. Also consider what actions you should be taking in the light of this. Financial performance Companies are generally bought and sold using a multiple of earnings. Financial buyers see businesses as streams of future profits. The absolute size of your business, turnover and profit affects the value of your business. Size matters, with smaller businesses appearing riskier than larger ones. So identify and pursue strategies to increase your profits and have more predictable future profit streams. Growth potential Acquirers typically pay more for businesses that have the potential to grow. What is your business’ growth potential? Consider how scalable your business is - geographically (selling current products in other areas), horizontally (selling more products and services to your existing customers) and vertically (scaling up and selling more using existing infrastructure). Resilience Saleable businesses are resilient - not overly reliant on any one customer, employee or supplier. If you´re too reliant on any one employee, you are at significant risk if that employee leaves. If you are too reliant on any one customer, your business risks instability. Try to reduce your overreliance – e.g. your largest customer should represent no more than 15 percent of turnover. Cash generating The more cash an acquirer must inject into your company when taking it over, the less that acquirer will pay for it. The inverse is also true: the less cash your acquirer must transfer into your business, the higher the potential price. Identify the ways you can better manage your working capital so that you are best in class in terms of cash generation in your sector. Recurring income One of the biggest factors determining the value of your company is the extent to which an acquirer can see where sales will come from in the future. If you are in a business that must start from scratch each month, the value of your company will be lower than if you have a recurring source of future revenue. A clear way to increase the levels of recurring income is to grow your service business and the revenue 28 www.psimagazine.co.uk
streams from service contracts, service works, upgrades and call outs. Sustainable competitive advantage Warren Buffett is famous for investing in companies that have a protective 'moat' – a clear point of differentiation. The deeper and wider the ‘moat’, the harder it is for competitors to compete. Think how you can increase the differentiated value you bring your customers and how you can differentiate your service offering. Customer satisfaction The extent to which your customers are satisfied, and your ability to assess customer satisfaction in a consistent and rigorous way, is very important to acquirers. Contract attrition levels and the age of your debtors are important indicators of customer satisfaction. Consider putting in place an objective way of regularly measuring the satisfaction of your customers such as a customer survey. Lack of dependence on owners To be valuable to an acquirer, your business must be able to succeed and grow without the business owners being at the hub and driving all key activities. Work on systemising your business and developing a high performing management team that can operate without the owners being present on a day to day basis. As a security installer, if you would like to develop a business that is saleable and attracts a higher price, consider these eight drivers of saleability and what actions you need to take to achieve the best value for the many years you have invested in your business. Jim Rathbone is the Managing Director of Rathbone Results. Contact him at jim@rathboneresults.com Access Control Intruder Alarm Automation Multiple Devices No Software Required Easy Setup with Checklist Prompts INTEGRATED SECURITY Send IP Alarms via Multipath-IP Network T: +44 845 470 5000 E: ireurope@innerrange.co.uk innerrange.co.uk POWERFUL WEB BASED CONTROLLER SIMPLE & EASY INSTALLATION
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Page 5 and 6: www.psimagazine.co.uk EDITORIAL Man
Page 8 and 9: CCTV ACCESS FIRE INTRUDER Gordon Mo
Page 10 and 11: The Best Comes From Within Rely on
Page 12: NEWS EXTRA Celebrating fewer false
Page 15 and 16: Did you know we hold £5M of stock
Page 17 and 18: PROMOTION Cameras and cyber health
Page 19 and 20: Camera monitoring app has new featu
Page 21 and 22: INTERVIEW Layering security systems
Page 23 and 24: SMOKE DETECTION should any one syst
Page 25 and 26: SECURITY Time and crime again Times
Page 27: initial requirement in terms of bei
Page 31 and 32: CCTV Switching on to low light Uri
Page 33 and 34: together raising standards Meet the
Page 35 and 36: PROMOTION IOTEGA® SMART HOME INTRU
Page 37 and 38: Open Door is an online service from
Page 40 and 41: APPLICATION CCTV camera coating cut
Page 42 and 43: APPLICATION Assured access control
Page 44 and 45: APPLICATION Access and intercom suc
Page 46 and 47: FIRE SAFETY What you need to know a
Page 48 and 49: FIRE SAFETY “All pre-learning mat
Page 50 and 51: FIRE SAFETY End-to-End Fire Protect
Page 52 and 53: FIRE SAFETY Pulse Alert VADs lower
Page 54 and 55: TCP/IP network PAVIRO Public Addres
Page 56 and 57: ACCESS CONTROL ACCESS CONTROL ACCES
Page 58 and 59: THE UK’S MOST SUCCESSFUL DISTRIBU
Page 60: APPOINTMENTS APPOINTMENTS David Bel

PSIJanuary2019

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