Landscape Management, October 2012
LANDSCAPEMANAGEMENT NET OCTOBER 2012 24 BUSINESSPLANNER2013 continued from page 22 Deal structure and documentation are negotiable but important While this strategy isnt impossible to make work there must be unique circumstances agreements a common vision and a business model to make it work 2 Your company is worth your revenue or Àve times your earnings Earnings or free cash drive the value of your organization not revenue The more proftable a company is the more valuable it is Historical performance of more than 12 months becomes less important in a value analysis Given uncertain market conditions a look at a companys trailing 12 month performance becomes important How are you trending Are you on budget for your 2012 plan Reporting strong earnings often counters what companies do for tax planning purposes i e show as little proft as possible We support not paying more taxes than necessary but this becomes a balancing act equation and its important to coordinate a proft plan with tax planning and the timing of an exit Be diligent when recasting fnancial performance to include add backs depreciation and interest An updated valuation should become standard practice in an organization Your deal and structure will onlY be as good as the team who negotiates it beware the industrY is full of pretenders following close out of a companys fscal year Next dont discount or ignore the importance of your companys value drivers or detractors Is your company marketable Revenue ruling 59 60 defnes value as the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell both parties having reasonable knowledge of the relevant facts Translation Its worth something only if someone will write you a check So what factors are important and how do they affect your multiple Consider these factors carefully and have an execution plan intangible value such as goodwill and reoccurring revenue accounts fnancial ability to generate an ongoing proft stream condition of equipment and feet type of business and its fnancial and market history economic outlook for the industry in
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