Increase valuation before a sale

Who this is for

Founder led lower-middle market companies with 5 to 50 million in annual revenue planning a sale in the next year.

The quick answer

Focus on the drivers that buyers pay for. Grow gross margin and recurring or contracted revenue. Reduce customer concentration and clean up working capital. Close gaps in reporting, contracts, and IP. Document processes so the business runs without you.

The method in ten steps

Lift gross margin
Run a pricing review, bundle for value, and remove unprofitable work. Track a margin bridge each month so improvements are clear.
Grow recurring or contracted revenue
Introduce service contracts or renewals with term commitments. Push multi year agreements where value is proven.
Reduce concentration
Cap revenue from any one customer. Build a list of near term targets in lookalike segments and push cross sell in current accounts.
Tidy working capital
Shorten days sales outstanding with deposits and milestone billing. Improve turns on A items and clear old stock.
Clean reporting and close rhythm
Publish a monthly pack with income statement, balance sheet, cash flow, and a short commentary. Hit the close on the same day each month.
Fix contract and compliance gaps
Standardise terms, add change orders, and refresh data protection addenda.
Protect IP
Confirm invention assignment agreements, update the IP register, and lock access to need to know.
Document core processes
Quote to cash, procure to pay, hiring and onboarding, and incident response in one page checklists.
Build a management bench
Name successors for critical seats and show how the business runs without the founder.
Collect proof
Short case notes with numbers, win rate by segment, and customer references ready to speak.

Example

A firm raised margin by two points, converted a service to annual contracts, and cut concentration by adding five mid sized accounts. Quality of earnings went smoothly and the multiple landed near the top of the expected range.

Pitfalls and fixes

Chasing volume instead of margin. Buyers pay for rate and quality.
Loose contracts. Clean terms cut diligence risk.
No bench strength. Show who runs the business day to day.

Checklist

Margin bridge with actions
Recurring revenue plan
Concentration and working capital plan
Clean reporting pack
Contract and IP review
Process checklists and bench map