5 Strategies to Preserve Core Values during a Business Sale

For many owners selling their business is not a simple financial transaction, it’s personal. Owners have poured blood, sweat and tears into building a business that is not only profitable but represents their values as individuals.  Their businesses become not just their livelihood but their self-worth and connection to some of their most important relationships.  The business values and culture are reflected in the everyday interactions with clients, vendors and employees.  Often owners live in the same communities where they operate their businesses and will continue to see and interact with these people long after they sell.  When it’s time to exit, it is no wonder that sellers are so interested in making sure that the company’s culture and values are maintained after they leave.
The best businesses are more than the sum of their physical assets.  The culture and values instilled in the business can contribute far more to its success in the form of goodwill.  Understandably the new owner may want to implement their own ideas about how to improve the business, however it is in both the buyer and seller’s interest to recognize the business’ core values and work to maintain them throughout an ownership transition.
Here are five strategies to make sure that the values instilled in a business are maintained through an ownership transition:
  1. Train management to embody the business’ values -Identify those managers that are likely to stay on through a transition and work with them to understand and exemplify the business’ core values.
  2. Develop a quality manual -A quality manual describes the procedures used in the business.  It is the playbook that provides continuity to day to day operations.  At times of transition the quality manual provides a valuable reference to new and old employees about how the business should function.
  3. Create a transition plan -With successful transactions, after negotiating the sale, buyers and sellers should sit on the same side of the table and develop a plan that outlines at least when and how the transition will be announced to clients, vendors and employees.  More thorough plans include setting goals, priorities and strategies to create conditions for a smooth transition.
  4. Plan to stay around through the transition- Once sold, sellers are often anxious to leave a business and move on to new projects.  However, the seller can serve as an advisor or consultant for a predetermined period of time. This can create much-needed stability and help to maintain a consistent business culture during the transitional period.
  5. Find the ‘right’ buyer – A qualified buyer has more than just the finances to pay the asking price for the business.  They also have the skills to run the business and the emotional intelligence to understand and carry on the business’ unique culture and values that made the business successful. It can be difficult for a seller to run a business while trying to sell it.  Working with a business broker like Exit Strategies Group can be invaluable when trying to find the qualified buyer that also understands and cares about the values of the business they are buying.

Good Exit Planning: First and Foremost, A Valuation of the Company

With the baby boomer generation retirement rush beginning to take hold, many business owners lack sufficient information about the value of their business for retirement planning purposes and don’t foresee the deal killers that await them.  A Deal Killer is a condition that, if undetected and unresolved before the sale of a business, will kill the transaction. The purpose of pre-sale planning is to maximize sale proceeds (as well as to achieve other non-financial goals), and it includes efforts to neutralize these Deal Killers.
The most common and avoidable Deal Killers are:
  1. Owners’ long-held belief that they can automatically one day sell their businesses for enough money to satisfy their financial independence needs and wants.
  2. Owners’ failure to reconcile their need for value with the market’s perspective of value before going to market.
  3. Owners’ exclusive focus on top-line sale price.
Owners are usually optimistic about the value of their businesses. Many of them dwell on the efforts and sacrifices they made from the onset of the venture. As a former entrepreneur, I know this well; however, optimism can result in owners consistently and often dramatically overvaluing their businesses.
In addition to company valuation, owners must factor into the likely sales price such factors as deductions for IRS taxes on the sale, debts that the company owns, transaction fees (escrow) and advisor fees (legal, CPA, Broker, and etc.). Business owners who jump into the sale process blinded by sale price optimism, or without consideration of the reductions to sale price, spend considerable time, money and energy only to find their glass half empty, if not shattered altogether.
At Exit Strategies, our job is to incorporate an understanding of marketplace reality into an owner’s pre-sale planning. We know that successful exits can require years of value-building efforts, but owners who insist that their businesses are worth far more than buyers do, either don’t realize this or are unwilling to face reality.
It is critical to the ultimate success of your exit that you get help to understand likely sale price and after tax proceeds and address deal killers well before your planned departure date. For further information contact Bob Altieri.

Simple Way to Avoid Stale Thinking and it’s Ugly Cousin Group-Think

Al StatzAs a professional advisors we all have habits, standards, rules and regulations that direct much of our daily activities. It’s important that we constantly reexamine our preconceptions, processes and practices to avoid stale thinking. It’s easy to default to accepted dogma that might be hindering our work. This isn’t to say everyone needs to be on the absolute leading or bleeding edge of their profession. However, periodically challenging our thinking and methods helps stimulate us to better serve our clients.

At Exit Strategies we do this with monthly best practice calls and regular “Summit” meetings.

Asking “why” is a necessary first step. We also need continuing education and fresh perspectives from team members.  (If you are a sole practitioner, you can invite colleagues, competitors or allied professionals, who likely face similar issues, to come together to share ideas and best practices.) To make this a productive exercise, have a shared agenda among participants to create commitment. When one person dominates the agenda, individual engagement diminishes and the session becomes less effective for everyone involved.

At an Exit Strategies Summit meeting, we typically set aside a full day away from the office to cover 6 to 8 important issues, ranging from M&A best practices, business valuation models, recent court cases, new or existing service offerings, market research, industry trends, internal systems or processes, or lessons learned from specific client engagements. Beforehand, we vote on topics and each team member takes the lead on at least one topic. During the meeting, to avoid group-think, a flow of ideas is encouraged, with open debate and critical assessment. Sometimes we invite outside professionals for fresh perspectives. This collaborative and collegial process produces greater clarity and better solutions, and it re-energizes our team. Of course, turning ideas into reality is what matters most, so we create accountability with specific and measurable action items, deadlines and follow up.

Obviously Exit Strategies didn’t invent this, but I hope that sharing this practice inspires or reminds our friends, colleagues and current and future clients, to adopt a similar practice to avoid stale thinking and its ugly cousin group-think.  

For further information contact Al Statz

Pricing Methodologies in Buy-Sell Agreements

When it comes to valuing a business for tax filings, M&A transactions, ESOP’s and most other purposes, business appraisers are usually free to use all of the methodologies in their arsenal.  But, when it comes to Buy-Sell Agreements that govern the sale or exchange of interests among closely-held business owners, many of these agreements specify a fixed amount or formula to price equity interests. Recently our firm analyzed the valuation and funding-related provisions used in thirteen buy-sell agreements that we encountered over the past several months.

Here’s a summary of the pricing approach taken in those agreements:

• 6 called for one or more independent valuations to determine share price (46%)
• 6 contained a predetermined price formula (46%)
• 1 used a fixed price (8%)

Despite the small sample, our findings were remarkably similar to a survey by forensics and valuation services firm Dixon Hughes Goodman LLP, which asked attorney’s what their preferred method was for valuations in BSA’s:

• 43% prefer a valuation
• 39% prefer to prescribe a formula
• 17% default to using a fixed price

Using a valuation process in a buy-sell agreement normally produces a value that is most fair to all parties, that stands up to scrutiny, is less likely to result in a dispute, and is less likely to be challenged by tax authorities.  On the other hand, the use of formulas and fixed prices introduces potential landmines that should be avoided under most circumstances.
 
Proper business valuation is one of the keys to making buy-sell transactions occur smoothly and cost-effectively. Jim Leonhard works out of Exit Strategies’ Roseville, California office. For more information feel free to Email Jim or call him at 916-800-2716. 

Funding Your Buy-Sell Transactions

Al StatzA properly structured Buy-Sell Agreement (BSA) ensures a market for owners’ equity when they leave the business, restricts the transfer of shares to unwanted parties, and lays out a set of rules and processes that mitigate the overall risk of uncertainty when a trigger event occurs. However, without having adequate funding mechanism(s) in place, a well-intentioned buy-sell agreement may not satisfy the shareholders needs when a trigger occurs.

In this post I’ll briefly outline the three most common funding sources that we find when reviewing buy-sell agreements for business valuation purposes.

  1. Life insurance is the safest bet in case of the death of a shareholder. The proceeds are paid out promptly, and if any additional payment is required one of the other methods can be used to facilitate full payment. Several tax and administrative issues need to be considered depending on whether the shareholders or the corporation owns the policies. The type of policy — term, variable or whole life — is also a consideration. The premiums for whole life are substantially higher than for term, but it builds cash value that can be used even if a death doesn’t occur. The BSA should be specific in how life insurance proceeds are to be treated for business valuation purposes.
  2. Seller financing is often used in BSA’s. Price and terms of the note should be clearly spelled out: full payment upon a trigger event? Or a down payment, term, and rate? Some agreements adjust the rate annually to reflect market rates, where others leave the rate fixed or pegged to a benchmark rate as of the buy-sell date. What about protection in case of default? My point is that there is no prescribed way. Obviously financing is a negotiation that can be as creative or as simple as the participants deem practical.
  3. Corporate cash or a bank loan that provides funding is another funding. However, cash isn’t always an option for small, closely-held firms that lack large cash reserves. Securing a bank loan for buyouts is often challenging, especially when a firm has just lost a key executive.

As a fourth option, we occasionally see clients partner with a private equity group to buy out a departing shareholder. By doing this they can also gain access to new capital to support future growth. This type of funding is usually only available to companies with a few million dollars in annual free cash flow. We know a lot of private equity groups and can make introductions when appropriate.

It’s important to point out that these funding options are not mutually exclusive, and are often used in tandem to fund the buyout of a departing shareholder.  We recommend that not only should a buy-sell agreement and the valuation be updated every year or so, but also that funding options be reevaluated and updated based on the company’s financial position, ownership and current valuation.


Exit Strategies brings independence and over 100 years of cumulative business valuation and M&A transaction expertise to every engagement. Founder and president Al Statz is available for free confidential consultations. You can reach him via email or by phone at (707) 781-8580.

How a Covenant not to Compete Affects Value in Buy-Sell Agreements

When someone sells a privately-held company, the buyer usually insists that the seller sign a covenant not to compete. In fact, in over 20 years of business sales and acquisitions, I have yet to see a purchase agreement without a covenant-not-to-compete (CNTC) provision. Now let’s say that your Company or its shareholders purchase all of a departing 50% shareholder’s interest for fair market value; is it reasonable to expect that the selling shareholder would not compete with the Company? I think so.
Yet, many buy-sell agreements (BSA’s) are silent on the non-compete issue, allowing the departing shareholder to receive full value for their shares AND start, join or back a competing business. I briefly surveyed the last 10 buy-sell agreements that I’ve reviewed for valuation purposes, and found that fully half of them were missing a non-compete provision!
A covenant-not-to-compete provision in a BSA usually restricts the selling shareholder from soliciting customers and employees, and otherwise competing with the Company for a specified length of time within a specified geographic area. A CNTC is considered an intangible asset of the Company and may have significant value. Stated differently, the Company’s shares, post transaction, may have significantly less value without a covenant not to compete from the selling shareholder. CNTC’s have value because they protect the future revenue and profitability of the Company.
How does the absence of a covenant not to compete affect share value?
One common approach to valuing a CNTC is called the differential valuation approach; where the business is valued under two scenarios. The first valuation scenario assumes that a CNTC is in place, and the second scenario assumes that it is not. Another approach involves determining the present value of the potential future economic damages that would occur as a result of competition. In either case, the valuation expert’s job is to determine the net impact on revenue, margins and future cash flows arising from potential competition by the selling shareholder. The difference in company value for each scenario is the value of the CNTC.
To project cash flows, the business appraiser will have in-depth discussions with company management to understand and develop assumptions regarding:
  1. Seller’s business expertise in the industry and general ability to compete
  2. Seller’s intent to compete
  3. Seller’s economic resources
  4. Seller’s contacts and relationships with customers, suppliers, and other business contacts
  5. Seller’s age and health
  6. Seller’s intent to reside in the geographic area
  7. Barriers to entry that would limit the seller’s ability to compete
  8. Probability and timing of seller competing
  9. Probability that competition will harm the company
  10. Potential damage to the company due to the seller’s competition
  11. Ability of the company to prevent a customer from leaving
  12. Buyer’s interest in eliminating competition
  13. Duration and geographic scope of the (typical) CNTC
  14. Enforceability of the CNTC under State law
If valuing a CNTC sounds time consuming, subjective, speculative and expensive, it is.  You could be faced with a situation like this if your buy-sell agreement doesn’t prohibit competition. Or someone could be buying shares at a premium someday.
What does your buy-sell agreement say?
The main objective of a buy-sell agreement is to provide for the orderly and reasonable transfer of shares in the event an owner dies or leaves your Company. Yet many BSA’s don’t accomplish this because terms are ambiguous or incomplete, leading to contentious disputes and litigation when a trigger event occurs. Exit Strategies regularly appraises businesses for buy-sell events, and in doing this work we get to read lots of buy-sell agreements (and other corporate documents governing the transfer of shares), and witness firsthand how they don’t operate as originally intended by the parties.
As a business valuation expert, I recommend that you: a) have a buy-sell agreement, b) understand what it says, c) are convinced that it accurately reflects the intentions of your shareholders, and d) have great legal, tax, financial and valuation advisors to help you get it right. Otherwise you may have a time bomb ticking away in your file cabinet.
If you have any questions regarding non-compete or other buy-sell agreement provisions that affect valuation, Email Al Statz or call him at 707-778-2040.

Success Habits of Optimistic People

“Optimism is the faith that leads to achievement.  Nothing can be done without hope and confidence.” “- Helen Keller

The medical community has accepted the heavily subscribed opinion that optimism is a dynamic source of good health, reduced stress, and improved cardiovascular function.  The successes that optimists are able to attain is largely a result of their expectation or visualization of success.  They succeed because they expect to succeed.  The following are habits that optimistic people commonly employ that nurture and sustain their optimism.
  1. Gratitude.  Simple pleasures from the seemingly insignificant experiences in daily life.  Gratitude for a sunrise, or the rain, or a kind gesture from a stranger.  Planting both feet on the ground first thing in the morning.  A six second hug from a loved one.  Daily expressions of gratitude normally find their sources among the smaller things in life.  Reserving gratitude for just the major events limits the opportunities for “refueling the spirits”.
  2. Exercise.  Walk the dog.  Hit the gym.  Pop the endorphins.  Clear the head. Move forward.
  3. Empathy.  Optimists express interest in others.  They focus outward and make every effort to view others in a positive light.  Optimists learn from others because they reserve judgment and listen.
  4. Manage the tribe.  Optimists surround themselves with other optimists.  Upbeat people create a better tempo and collective spirit, eliminating the energy depletion that negativism produces.
  5. Altruism.  Optimists are generous with time and money.  Optimists “give back” and recognize that the payback exceeds the investment.  Generosity begets gratitude.
  6. Forgiveness.  Shake off the grudges and tribulations of the past.  There is no optimism in the past.  Forgiveness wipes the path clean and makes the hike easier.
  7. Problem solve.  Optimists see obstructions as puzzles in need of solutions rather than irreconcilable roadblocks.
  8. Express optimism: Smile.  A smile communicates an upbeat, positive view toward life that others will recognize and want to share.
An old joke that addresses optimism involves a psychological study that was conducted involving two seven year olds, a boy and a girl.
The boy was placed in a room filled with every toy imaginable and left to his own devices.  The girl was placed in a room filled with nothing but horse manure and a shovel.  After an hour, the boy and girl were interviewed.  The boy was distraught because “there were so many options, so many toys and so little time, that I didn’t know where to start.” The girl came out of the room smiling and giggling and upon questioning responded,  “I grabbed the shovel and started to dig because I figured that with all of that horse manure, there had to be a pony in there somewhere.”
“Everything has beauty.  Not everyone sees it.” – Confucius

Your Buy-Sell Agreement: In good shape? Needs a tune up? Or Disaster waiting to happen?

An Ounce of Prevention is Worth a Pound of Cure

I can’t tell you how many times I’ve heard from business owners and their spouses that a key person became disabled or died and left an operating closely-held business in turmoil. What, no Buy-Sell Agreement? Ask anyone who has been selling and appraising business for a number of years and they will tell you this sort of thing is common. All businesses with more than one shareholder should have a Buy-Sell Agreement (“BSA”) in place. Even when companies have BSAs, they are poorly written, causing divisive and expensive issues down the road.

All multi-owner businesses need a well-written BSA to transfer shares in a fair and efficient manner when a shareholder dies, becomes incapacitated, is involved in a marital dissolution, quits or is fired, retires, or the company enters bankruptcy (aka,”Trigger Events”).

Exit Strategies’ accredited appraisers perform numerous business valuations each year, and because this work requires us to review corporate documents, we can say with some authority that many privately-held companies have problematic Buy-Sell Agreements from business, funding and valuation perspectives. When we come across B-S Agreements (pun intended), most often the owners didn’t want to invest the money to do it properly, or they just didn’t understand how import it was to have a viable BSA in place at the outset. Unfortunately, those who experience costly litigation, internal disputes, business erosion and family problems learn a painful lesson later on.

Shareholders have three choices when deciding on how shares will be priced when one of the aforementioned trigger events occurs:

  1. Fixed Price: Shareholders agree on a set price. Unfortunately, the price is likely years out of date and the shareholders usually have not agreed on a way to update the price.
  2. Price Formula: Shareholders agree on a formula to calculate future pricing. Chances are, no one has calculated it lately and because of changes in the company, economic and industry conditions over time, the formula price may be higher or lower than fair market value at the time of the trigger event. Also, it’s often seen where the shareholders haven’t agreed on ways to make necessary/appropriate adjustments to the formula.
  3. Valuation Process: Shareholders agree on a process employing one or more appraisers to determine the value of shares using guidelines specified in the BSA. There are two types of process BSAa: Multiple Appraiser and Single Appraiser. Multiple appraiser agreements call for the selection of two or more appraisers to develop one, two, or three appraisals whose conclusions form the basis for the final price. If that process sounds time consuming, cumbersome and expensive, IT IS!! It can also be divisive. Single appraiser agreements call for the selection of one appraiser whose valuation sets the final price. The choices are to a) select the appraiser and value upon a trigger event; b) select the single appraiser now and value at the trigger event; or c) select the single appraiser now, value now, and of course value again when a trigger event occurs.

Our Recommendation is to SELECT ONE APPRAISER NOW and VALUE NOW

  • Select Now – If the shareholders creating the buy-sell agreement name the appraiser at the time of the agreement, all parties have a voice and can sign off on the selection. Early on, when everyone’s interests are aligned, this is a relatively easy decision to make. Doing it after a trigger event, when interests have diverged, is very difficult.
  • Value Now – Once selected, the chosen appraiser provides a baseline valuation, which is a fantastic way to put all shareholders on the same (price) page. We often provide a draft report, and give everyone time to provide comments for consideration before the report is finalized.

Why selecting a single appraiser now and appraising now is the best choice for closely-held companies when creating a Buy-Sell Agreement:

  1. The selected appraiser is viewed  as independent by everyone
  2. Because the appraiser must interpret the BSA language related to valuation when conducting the initial appraisal, any issues regarding lack of clarity or inconsistency with the owners’ intentions can be resolved up front
  3. The valuation process is observed by all shareholders at the outset, so they all know what will happen when a trigger event occurs (no surprises)
  4. The concluded value establishes a baseline price (no surprises)
  5. The selected appraiser maintains independence with respect to process and renders future valuations consistent with the BSA terms and prior reports
  6. Subsequent appraisals, either annually or at trigger events, should be less time consuming and less expensive
  7. Parties will likely gain confidence in the process
  8. Parties will always know the current value for the Buy-Sell agreement, which is helpful for personal or estate planning purposes
  9. The initial valuation gives the shareholders a roadmap to increasing value if that is their objective.
  10. The appraiser’s knowledge of the company and industry grows over time, enhancing confidence for all parties
  11. Creates a means of maintaining pricing for other transactions, thereby enhancing “the market” for a company’s shares


Valuation is a key piece of any shareholder buy-sell agreement. If you need help with the business valuation provisions of your buy-sell agreement, or need a valuation for a trigger event, feel free to Email Bob Altieri or call him at 916-905-5706. 

The Dismal D’s of Buy-Sell Agreements

Well-written Buy-Sell Agreements (BSA’s) enable orderly share transfers upon the occurrence of certain events during the life of a business. Buy-Sell Agreements also prevent litigation that can quickly create a lose-lose situation for business owners. This article presents a list of 27 trigger events and common issues to be addressed in Buy-Sell Agreements. And, just for fun, each item on the list begins with “D”.

Buy-sell issues are unpleasant to think about; which is why owners often put off addressing them and why we call them Dismal D’s. However, it’s only good business to put a plan in place that protects company and shareholder interests when these events occur.  And they will occur.

Buy-Sell Agreement Dismal D List

  1. Departure (quits or leaves)
  2. Disinterest (mentally but not physically leaves)
  3. Discharge (fired)
  4. Divorce
  5. Death
  6. Disagreement
  7. Deadlock (major disagreement)
  8. Disability
  9. Distress (within the business)
  10. Default (personal bankruptcy)
  11. Disqualification (licensing, regulatory, etc.)
  12. Disclose (confidentiality)
  13. Donation (donate or gift stock)
  14. Do not compete
  15. Dual entities (e.g. holding and operating)
  16. Dilution
  17. Drag-along rights
  18. Distribution policy
  19. Dividends and Distributions after a trigger
  20. Dispute resolution
  21. Death benefits (life insurance)
  22. Down payment and debt (buyout financing)
  23. Determination of value (fixed price, formula, or independent valuation)
  24. Defining elements of any valuation engagement
  25. Discounts (for minority interests)
  26. Different discounts (depending on trigger type)
  27. Dueling appraisers

Items #1-14 are common trigger events. Items #15-27 are common issues to be negotiated and addressed in the BSA. Items #22-27 are nearest and dearest to our hearts as business valuation experts. Arguably, valuation is the most important (and argued over) aspect of buy-sell transactions.

The above list is essentially a checklist for consideration by shareholders when creating or reevaluating a Buy-Sell Agreement. Owners should work with their partners, corporate attorney, CPA and business appraiser to understand and address all of these issues.  “Daunting D List” may be a better description!

Not only is it critical to have a BSA (yes, many businesses don’t have one), but it’s also vital that the BSA be kept up to date. Owners come and go. Shareholders’ personal, family and financial circumstances change over time. Likewise, businesses are not static and economic and industry conditions, services offered, customers, management depth competition are in a constant state of flux – all key factors in business valuation.

Click here for more information on how Exit Strategies’ helps with buy-sell agreements.


Business valuation plays a central role in buy-sell transactions and buy-sell agreements. Contact one of Exit Strategies’ senior advisors with any questions or for a no obligation, no cost and confidential consultation.

Exit Planning: A New Year’s Resolution

“Expect the best, plan for the worst, and prepare to be surprised.” – Dennis Waitley
This is the time of year when many of us decide that we need to change things or accomplish new things, and we set goals at the beginning of the New Year. Quit smoking; lose weight; make more money? How about taking a look at your business this year and begin to prepare it for your exit, which will ultimately arrive whether you’re ready or not.  Surveys have shown 75% of business owners have done little or no exit planning. Owners that do plan ahead are more likely to attract buyers and obtain a higher selling price. Here are some key steps to take this year:
1. Clean up financial records.
  • End commingling of expenses, assets & liabilities. This may result in increased tax liability, but will more than pay for itself by returning a higher sale price. Example: suppose you wanted to sell your businesses in 3 years. If the market multiple of EBITDA (Earnings Before Interest, Taxes Depreciation & Amortization) is 4, for every extra $1 of EBITDA you show on the bottom line, you receive an extra $4 in the selling price.
  • Declare all sales revenue.
  • Sensible, consistent, GAAP financial statements (from the buyer’s CPA prospective).
  • Normalize each of your financial statements. Make notes below each of your year-end statements regarding expenses that are non-recurring in nature, or one-time expenses that are not normal in your business operation.
  • Control expenses: if you have a corporation, take a look at your salary, perquisites and benefits. Decide what it would cost if you had to replace your services with someone else. A business broker/appraiser would make this adjustment to arrive at a modified level of earnings that is commensurate with market rates of compensation. If you have more than one owner working in the business, adjust the salary, perquisites and benefits for each of the owners.
  • If you personally own the building that houses your operation and the corporation or LLC pays rent to you, check to see that the rent is at a market rate. Differences between market rent and actual rent being paid will adjust EBITDA.
  • Pay all of your taxes on time; sales, personal property, payroll, etc.
  • Maintain sensible, accurate management reports.
2. Systems, policies and practices.
  • A well-documented operation pays off by adding intangible value from a buyer perspective.
  • Develop or update systems – and have detailed documentation for all processes your business performs.
  • Measure, report and act on key performance indicators
  • Develop or update employee manuals, policies and job descriptions  for each employee.
3. Personal Goodwill.
Depending upon the type of business and your role in it, take a hard look at your involvement with customers. If most of them do business with the organization because of personal relationships with you, begin to transfer these relationships to someone else or a new hire in your organization. From a value perspective, goodwill that is attached to you is more difficult to transfer to a buyer than goodwill attached to the enterprise.
4. Customer Concentration.
Take a look at your top 10 customers and the percentage of revenues and gross profits that each customer generates. A high concentration of business with a small number of customers will have a negative effect on value. One way to correct high concentration levels is to increase the size of the customer base.
For advice on exiting your company feel free to contact Bob Altieri at 916-905-5706 or boba@exitstrategiesgroup.com.