ExitVision Valuator

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Company Valuator

Answer all questions to the best of your knowledge. You can point your cursor over the question for more details. After you’ve made your selection, a short summary of that selection will appear. If that summary does not match your business, make a different selection.

Which of the following best describes the customer concentration of your business? what’s this?High levels of customer concentration are a common feature of smaller businesses, which may have profited over many years from a small number of key clients and/or relationships. Unfortunately, high customer concentration represents an outsized risk for a potential buyer, and will also weaken their ability to obtain financing by scaring away more conservative financial backers. Less customer concentration is almost always better. 11

No concentration - Top 3-5 customers account for <10% of business

Minimal concentration - Top 3-5 customers account for 10-30% of business

Moderately concentrated - Top 3-5 customers account for 30-50% of business

Highly Concentrated - Top 3-5 customers account for 50%-80% of business

Extremely concentrated - Top 3-5 customers account for >80% of business

Businesses with little or no customer concentration are typically highly valued due to their presumed resilience in the face of losing one or more customers.

Businesses with little or no customer concentration are typically highly valued due to their presumed resilience in the face of losing one or more customers.

Businesses with moderate customer concentration can sustain solid valuations, but you will have to underscore the strength of your existing customer relationships to get potential buyers comfortable with the customer concentration risk.

Businesses with high customer concentration will be subject to discounted valuations in most cases, as the loss of one or two key accounts could seriously damage the business. Potential buyers will scrutinize existing customer relationships to ensure that no near- or medium-term disruptions are imminent.

Businesses with extreme customer concentration risk will be very hard to sell. Potential buyers will require great confidence that existing customers are locked in for the long haul and will be looking for immediate opportunities to lower that customer concentration risk.
Is your business self-sustaining without your daily leadership? what’s this?Buyers of your business will look favorably on a business that runs on "autopilot", or at the least can be handled by a competent manager without tremendous technical skills or deep personal relationships specific to your business. The capacity of your business to be self-sustaining without your daily oversight and leadership is therefore important to the value of your business. 12

Yes - business runs on autopilot through responsible employee-managers

Yes - but leadership needs to be involved only part time

No - leadership has to be involved at or near full-time in an oversight role

No - leadership is heart and soul of business and business would fall apart if leadership stopped paying attention to the daily details.

Being able to enjoy the fruits of your business without having to spend any meaningful time tending to it is a privilege few business owners attain. Potential buyers will pay a premium for your fully delegated, professionalized business.

Most business owners hope to develop their business to the point where it can run with only part-time involvement on their part. Potential buyers will pay a premium for your largely delegated, professionalized business.

The daily attachment of a business owner to his/her business is the standard circumstance of most businesses. As such potenital buyers will not penalize you for this, but they will need to plan for and budget a clearly defined replacement for you, which increases their transition costs and risks.

If you are the heart and soul of your business, a new buyer will face significant risks as you transition the business. If you are irreplaceable to your business in the short and medium term, it's not clear that you have much of a business to sell unless you can clearly show a low-risk transition path.
How much extra cash does the business need to have available in the bank? what’s this?Many businesses require extra amounts of cash to be set aside on a regular basis to cover ongoing working capital and/or capital expenditure requirements, such as when payroll is due, accounts receivables are slow to come in, payables can't be stretched, or equipment or infrastructure needs to be maintained, replaced or upgraded. The relative size of this set-aside cash amount can impact valuation. 13

<1% of Revenues

1-5% of Revenues

5-10% of Revenues

10-25% of Revenues

>25% of Revenues

Required cash reserves at <1% of Revenues suggests a business that has working capital requirements well under control.

Required cash reserves at 1-5% of Revenues suggests a business that has working capital requirements well under control.

Required cash reserves at 5-10% of Revenues suggests a business that is well run, but which could probably make incremental improvements to working capital management

Unless your business is a bank, required cash reserves at 10-25% of Revenues suggests a business where short term working capital management is inefficiently managed.

Unless your business is a bank, required cash reserves at >25% of Revenues suggests a business where short term working capital management out of control.
Does your business have excess productive capacity? what’s this?If your business has significant excess productive capacity available, buyers will see this as an opportunity to grow the business without incurring large new fixed costs for leased space, new machinery, etc. 14

Business could grow revenues >100% utilizing existing assets

Business could grow revenues by 50-100% utilizing existing assets

Business could grow revenues up to 50% utilizing existing assets

Business at or very near to capacity today

Business operating on unsustainable basis and will have to scale back

Being able to grow your business >100% without significant new investment suggests that your business is operating well below capacity; Unless this excess capacity is the result of a broader downturn in the business, it should support a higher valuation.

Being able to grow your business 50-100% without significant new investment suggests that your business is operating well below capacity; Unless this excess capacity is the result of a broader downturn in the business, it should support a higher valuation.

Being able to grow your business up to 50% without significant new investment implies a potential buyre will have adequate short and near-term room to grow before budgeting for new infrastructure expense. Unless this excess capacity is the result of a broader downturn in the business, it should support a higher valuation.

Operating your business at or near capacity suggests an efficiently run operation, however it also suggests to a potential buyer that future growth will be dependent on a capital budget for new infrastcuture investments and the introduction of new related fixed costs.

If your business is operating on an unsutainable basis and needs to scale back this creates challenges for potential buyers, who will have to allocate capital up front to new infrasturcture to support the business in just its current state.
What percentage (%) of Revenues are linked to multi-year contracts and/or stable long term client relationships? what’s this?Multi-year contracts and long-term client relationships refer to revenues generated by the same customers, year over year. Your percentage of repeat or long term contractual business suggests to a buyer how hard they will have to work upon closing to maintain the viability of the business. 15

75-100%

50-75%

25-50%

<25%

Maintaining a roster of multi-year clients at the 75-100% level is exceptional, and will deserve a premium valuation from potential buyers, especially if the factors (e.g. key people or processes) leading to your client retention are included as part of a transaction.

Maintaining a roster of multi-year clients at the 50-75% level is admirable, and should generally improve your valuation from potential buyers, especially if the factors (e.g. key people or processes) leading to your client retention are included as part of a transaction.

Unless your business has a demonstrable, naturally repeating flow of new clients by virtue of some specific factor (e.g. excellent retail location, robust internet presence, etc.), a roster of multi-year clients at the 25-50% level implies that a new buyer will have to work very hard to maintain sales at prior year's levels. Potential buyers will be focused on understanding how to simplify new client acquisition to mitigate future risk.

Unless your business has a demonstrable, naturally repeating flow of new clients by virtue of some specific factor (e.g. excellent retail location, robust internet presence, etc.), a roster of multi-year clients at the <25% level guarantees that a new buyer will have to work extremely hard to maintain sales at prior year's levels. This will weaken your valuation and will turn off many potential buyers.
How would you characterize your business' international exposure? what’s this?International business can be both a blessing and a curse. Large international sales volumes may imply a higher degree of business sophistication, consistency, smart diversification of risk and new avenues for growth, but inevitably create new risks linked to currency exposures, cultural or language factors, policy shifts impacting your products/services, and/or radical geopolitical events in less stable emerging markets. That said, on balance, a demonstrated ability to sell internationally supports a higher valuation of your business. 16

>25% sales into international export markets

5-25% sales into international export markets

<5% international export sales

>25% sales into international export markets suggests your business' value proposition is able to cross borders easily and is capable of not just supporting, but driving the success of the business. This will typically support a higher valuation.

5-25% sales into international export markets suggests that the business has at least a toe-hold in international markets which should permit further global expansion. This will typically support a higher valuation.

<5% sales into international export markets will typically not penalize a business, given the massive size of the US domestic market, but neither does it permit the business to stand out by having access to growing and diverse overseas markets.
Are your headquarters located in a largely urban or rural setting? what’s this?Urban or near-urban settings are naturally home to more potential buyers, so a simple supply and demand dynamic exists supporting higher valuations for urban-located businesses. It is also often easier to find talent for more positions in urban settings, thereby increasing the capacity of the business to grow and sustain itself over time with the right team members. 17

Major urban or related inner-suburban location

Secondary urban or remote suburban location

Rural location

A major urban location supports access to buyers, resources, and customers, all of which add up to higher valuation potential.

A secondary urban or remote suburban location may have many qualified buyers, but will typically not support the multiples of more urban-oriented businesses.

Rural locations typically suffer from lower valuations due to the relative lack of buyers, resources, and customers. There are many terrific rural-based businesses, however they are simply harder to sell.

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