Mergers & Acquisitions – They say selling a business is an art – we’ve turned it into a science
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Accountant Kyle Smith shares expert insights into optimizing a business’s financial health before going to market. This includes understanding and tracking five key performance indicators (KPIs) and financial metrics to evaluate a business’s financial health and valuation, the need for cost control analysis, benchmarking against industry averages, and monitoring revenue, gross profit, and sales mix to identify areas for improvement and maximize profits.
“The five KPIs an owner should track are revenue, gross profit percentage, net income, net income percentage, and net cash flow. These are critical because if you understand these top to bottom, then you understand the business top to bottom.”
Kyle Smith
| How is optimizing the financial health of a company different from pre-sale financial due diligence? Why is this an important step before starting the sale process? [2:10] | |
| What are the goals of pre-sale financial optimization? [4:50] | |
| What are the five key performance indicators (KPIs) for businesses to track and avoid? [13:14] | |
| How well do owners understand revenue metrics compared to what buyers want to see? [20:50] | |
| How common is it for owners to track revenue by margin? [27:45] | |
| Why is it important to track net income? [35:45] | |
| What’s the difference between net income and net income percentage? [40:37] | |
| What is the statement of cash flow, in a nutshell? [46:01] | |
| What are the most common differences between a P&L and a cash flow statement? [47:15] |
Kyle Smith, CPA, is a co-partner at Strata Cloud Accountants where he provides top-tier advisory and CFO services as a dedicated champion of small and medium-sized businesses. Kyle began his career as an accountant and controller for various bar and restaurant groups in Austin, then he led a talented group of accountants at the software development company Scalefactor, gaining valuable exposure and advising clients across many different industries.
We invested over a decade perfecting every step of the process. The result is a method proven to reduce your risk and maximize your price.
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