Maximizing your company

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While that relationship may well havebeen affected, another important area that has been impacted has been private institutional investment in particular, the eagerness of private equity funds to entetr into transactions, and the valuation that an institutional investor mighrt assign to a company. This is because private equitgy firms often augment their equity investment with bank debt in order to maximize the returns totheir shareholders. If credi conditions make it more difficult for these firmes toraise debt, deals are less with the ultimate result of a lowerr valuation for a company if a transactionn is being contemplated.
If ownerse or management of any company are anticipating a saleor capital-raisinvg event of this type at some point, how can they ensurse that the valuation is a favorable as possible? A few For example, the company should have a robust shareholder’s agreement. This is a very but key, part of any corporat documents. It addresses issues such as ownership, the rules governing sales of shares, composition of the boarf of directors andother matters. A corporate attorney with experiencre in addressing these specific matters shoulddrafrt it.
If you have not had competent counsep review thesedocuments recently, it would be moneuy well spent: An ounce of prevention here can mitigate huge problemsd later. Any law firm with a businesas law practice should be able to assist in a matterr suchas this. It should go withouty saying that if your accountinfg records are inpoor condition, it will be extremel hard to support any sort of attractivew valuation. In fact, in this market, many firmsw will simply pass on a deal wheree the financial records are This is simply becausew there are enough other deals out therwe where this is not an issue that an investor will just move on tothose deals.
Any company that has any reasonm to believe that it will be looking to raise outsidsecapital – debt or equityt – should have appropriate accounting controls and procedures in If the company does not possesxs the internal expertise to implement thes e controls, any competent CPA firm shouldx be able to assist. As an end management should look to put in place a procesw that results in audited financial If management can articulate and defenf how the company will achieve its growthu goals for the next coupleof years, it will have a majo r impact on valuation. This includes concrete sales goals, executable plans to achieves those goals and infrastructure rollout tosupport growth.
Even though growtj right now mightbe minimal, if management can crediblgy demonstrate how it will address this issue, it can make a very significany difference in how the company is viewede by an outside investor. By preemptively addressintg these issues, management seeking outside investmentt can make their company more attractive and help support a more compelling valuatiobn from the perspective ofall