Engine

Why a well-oiled sales and marketing engine is key to a high company valuation

Building a high-performing sales and marketing engine is critical for business growth. And when the time comes to sell, it will leave a positive impression in the mind of the buyer, and significantly increase your company valuation.

How a sales and marketing engine affects your company valuation

When the time comes to sell your business, if you want to maximise your business valuation, it’s vital that you can prove to any potential investor that your business will continue to have strong growth into the future, long after the sale. You will also need to show that sales will continue if you exit the business.

You can do this by ensuring that you have a top-performing sales and marketing engine in place, with clear processes and automation, healthy numbers of inbound leads, a healthy pipeline of likely future sales and a team of top performing salespeople to convert those opportunities.

Crucially, you’ll also need to show that your sales do not depend heavily on one individual – usually the owner – or a small group of top-performing salespeople who could potentially leave the business at any time. Remember, single points of failure can significantly decrease the value of your business.

If you are dependent on a handful of top performers for all your sales, then your pipeline will be seen as exposed should those people leave, which will greatly increase the perceived level of risk in the mind of the buyer and ultimately, reduce your valuation.

Sales and Marketing questions the buyer/investor may ask you:

Questions

When the time comes to sell your business, it will be important that you can answer the following questions:

  • Do you have a top performing, well-trained sales team?
  • How important is the founder’s role in any sales process?
  • Do your sales people have autonomy over the sales process?
  • What is your average customer acquisition cost?
  • Are your sales opportunities predictable or do they happen through chance and good fortune?
  • Does the business have a good CRM system for managing leads, sales, and clients?
  • What percentage of your leads convert into paying customers, or from trials to activated clients?
  • How much of your sales and marketing process is automated?
  • Do you have a large database of engaged clients and prospects, particularly opted-in email lists?
  • Do you have high numbers of engaged followers on social media?
  • Do you have a high number of unique website visitors?

Building a strong and high-performing sales and marketing engine is critical for business growth, and when the time comes to sell your business, it will leave a very positive impression in the mind of the buyer and significantly increase your business valuation.

Thinking about selling your business? Contact our Corporate Finance experts

If you’re considering selling your business or securing an exit, whether in the next few months or in the coming years, Leonherman can help you. Contact us today to find out about our Corporate Finance services and to speak to one of our advisers.

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