RareBrain Podcasts

Buyers want to maximize their investment. The value of a company is generally a multiple of its earnings before income tax, depreciation, and amortization—or EBITDA. While the range of those multiples is set by the industry, there are aspects under your control that influence whether that multiple is at the upper or lower end of that range. For example, a buyer will look for any blemishes affecting your company’s position. In fact, smart buyers will use any weaknesses to drive down the purchase price. On the other hand, buyers will also pay a premium for various factors. In this podcast Gower Idrees, CEO of RareBrain, lists the top ten things business buyers look for in a business.

Finding the right balance of inventory is more than just having the right number of products in stock. It is predicting sales trends, analyzing costs, and obtaining contractual agreements with suppliers to lower overall costs. Inventory management can determine the health of the supply chain. It can also impact the financial health of the company. It is important for a business to maintain optimum inventory to meet its requirements and avoid over or under-stocked inventory issues. Optimizing inventory requires constant and careful evaluation of external and internal factors, especially when preparing a company for sale. In this podcast Gower Idrees, CEO of RareBrain, explains how optimizing inventory can improve business valuation in a business sale.

The best way to prepare your business for selling is to think like a buyer. Gower Idrees, CEO of RareBrain calls this process reverse due diligence, which is similar to getting your house ready for sale. You don’t put a home on the market with mold under the carpet, leaky ceilings, termites, and three years arrears in property taxes. The potential buyer will discover the problems as soon as the home inspector arrives. The same is true when selling your business. A potential buyer will look for any blemish to lower sale price. In this podcast Gower Idrees, CEO of RareBrain, outlines how reverse due diligence can help prepare you to sell your business.

Many business owners assume that valuing a private company should only be done when they are ready to sell or if a lender requires a valuation as part of its lending criteria. But valuations are important beyond selling and lending purposes; they can also be integral to business and effective exit planning. So business owners would be well served to get a baseline valuation of their company. But that’s where things can get complicated because there are a lot of ways to value a business. In this podcast Gower Idrees, CEO of RareBrain, offers his perspective about valuations and explains some important truths that every business owner should know.

You’ve worked hard to build your business and make it into a success. And now you’re ready to exit. It is human nature to be tempted to take your foot off the accelerator once it’s up for sale. Many business owners become mentally and emotionally removed once they decide to sell. But it can take a long time to sell a business and during that time, you need to stay engaged and dedicated to running the business or risk the company’s performance suffering, which in turn could reduce its value. In this podcast Gower Idrees, CEO of RareBrain, outlines the five key drivers of business value that you must keep on track to maximize business sale value.

The best way to prepare your business for selling is to act like a buyer. What a buyer wants is to minimize their risk and to feel confident that the company they are buying will continue to perform at a high level and sustain its growth and cash flow long after you have exited the company. The more risk a buyer perceives the more they will seek to reduce the sale price. A common way to improve valuation is to improve revenues and increase cash flow. But it can be equally important to reduce risk. In this podcast Gower Idrees, CEO of RareBrain, offers insight into the relationship of risk to your company’s valuation.

Capital expenditures, also known as capital outlays, relates to the acquisition of capital assets held over a period of time, usually more than a year. This can include expanding a plant facility, upgrading equipment such as company fleet cars, or installing a new computer system. Even though capital expenditures are used to improve the company, they are typically considered a liability as far as accounting is concerned. As a general rule, this type of expenditure is not directly tax deductible and is designed to be recouped over time through future performance and benefits. So when an owner is exiting the business, a large amount of recurring annual capital expenditures can complicate the sale. In this podcast Gower Idrees, CEO of RareBrain, explains how capital expenditures can impact valuation when trying to sell your company.

If you’re going to sell a business today, there’s a very high likelihood, depending on the type of business and the risks involved, that the buyer will want to pay some portion of the purchase price as an earn-out. An earn-out is essentially a portion of the purchase price, paid in the future, based on the performance of the company and determined using some previously agreed upon formula. Earn-outs are important to bridge the valuation gap between the buyer and the seller. In this podcast Gower Idrees, CEO of RareBrain, offers insights structuring earn-outs when selling a company.

When selling their companies, business owners take the letter of intent stage entirely too lightly. A letter of intent document beyond spelling out deal terms is really a method of allocating risk between buyer and seller and coming to a compromise to balance that risk. The time to negotiate key deal terms is before you sign the letter of intent. In this podcast, Gower Idrees, CEO of RareBrain, offers insights into structuring of intents in a business sale.

Business buyers do not like to see customer concentration issues in businesses. A customer concentration where an individual customer accounts for more than 20% of the gross sales can create substantial risk for the buyer. If there is a customer or supplier concentration, either buyers will not buy the business or they will expect a big discount and/or a substantial earn-out in the sale. In this podcast Gower Idrees, CEO of RareBrain, offers insights into dealing with customer concentration issues when selling your business.