A successful business often requires the owner to invest decades of hard work, dedication and vision. When an owner is ready to part with a business that represents such a substantial investment, Devin Green has one piece of advice: “Don’t leave money on the table!”
Green, the Chief Operating Officer for Greenville-based The Capital Corporation, says “over the last 25 plus years, our firm has identified seven ‘sectors of value’ that are important to emphasize in order to command the highest valuation for our clients.”
When The Capital Corporation has been engaged to sell a business, one of the steps that Green and his team take is to thoroughly analyze the business as a buyer would, beginning with a very detailed SWOT (strengths, weaknesses, opportunities, threats) analysis.
“From that SWOT analysis, we’ll extract comprehensive list of weaknesses and threats that a prospective buyer will likely eventually identify,” Green explains. “Then we take every single weakness and threat and transfer those into what we call a ‘pre-mortem analysis’ – Within that pre-mortem analysis, we start building out the mitigating points and/or complete a cost/benefit analysis on addressing those issues before we go to market.
Green says The Capital Corporation has developed a variety of tools to ensure its clients earn the highest valuations for their businesses.
“Our pre-mortem analysis is a springboard to get ahead of these ‘chinks in the armor’ that the prospective buyers will likely find,” he says, “so when we lift up the curtain, the chinks won’t be there anymore.”
In light of some of the common challenges businesses often face, Green has staffed his team with not only investment bankers, but also specialists which offer highly unique skillsets, including software engineers, digital marketers, cyber security experts, and others that help develop and emphasize the strengths and opportunities from the SWOT analysis.
“For example, there are cases where we have a great company, but we want to accelerate growth in order to command millions of dollars more in valuation for our client. In those cases, we’ll help our client deploy unique sophisticated digital marketing tactics and strategies – such as geofencing and behavioral targeting – to modernize their marketing model and pop the top line revenue before we go to market.”
“…there are cases where we have a great company, but we want to accelerate growth in order to command millions of dollars more in valuation for our client. In those cases, we’ll help our client deploy unique sophisticated digital marketing tactics and strategies… to modernize their marketing model and pop the top line revenue before we go to market.”
COO, THE CAPITAL CORPORATION | DEVIN GREEN
Beyond these digital tactics, there are situations where The Capital Corporation will help demonstrate the certainty of future cash flows of the business by leveraging one of Green’s in-house, database architects to build the necessary algorithms to analyze years of the client’s data in order to quantify how much of the company’s revenue is repeat revenue and recurring revenue.
“Our clients can send us (electronically) every single transaction with every single customer for every single SKU or service offering going back 10 years, and those files are massive,” Green says. “And we’ll have our database architect build the algorithms needed to crunch out what percentage of revenue is from repeat customers and what percent is recurring revenue every year, and we can quantify this data for prospective buyers. The ability to predict future revenue streams lowers the risks for buyers, which ultimately translates into higher valuations for our clients.”
“And all of a sudden,” Green continues, “we’ve had plenty of situations where the buyer says ‘Wow, we had no idea that 92 percent of your revenue was repeat and 86 percent was recurring revenue – we can pay more for this business now because we know the future performance has less risk for us.’”
Building on decades of success and a large, corporate support system, which Green refers to as “the mother ship,” The Capital Corporation’s leaders are excited to help their clients extract the value they deserve when it comes time to sell a business.
“We have fun looking at every sale through the buyer’s lens. We like to think that by doing things a little bit differently, we can make a very big difference by unlocking a lot of value,” Green says. “These are just a couple examples of the things we do before we ever go to market.”