At M&A Advisory, we specialise in supporting marketing communications and consulting businesses through the sale process. One overlooked value driver is ๐ฌ๐ญ๐ซ๐จ๐ง๐ ๐๐๐ฌ๐ก ๐๐ฅ๐จ๐ฐ ๐ฆ๐๐ง๐๐ ๐๐ฆ๐๐ง๐ญ.
Here’s why it matters for your M&A transaction:
โ ๐๐ฎ๐ฒ๐๐ซ๐ฌ ๐๐ฑ๐ฉ๐๐๐ญ ๐ฒ๐จ๐ฎ ๐ญ๐จ ๐ฅ๐๐๐ฏ๐ ๐๐๐ก๐ข๐ง๐ ๐๐ง๐จ๐ฎ๐ ๐ก ๐๐๐ฌ๐ก to support the normal operating requirements of the business. This amount is negotiated during due diligence and becomes a part of the final deal.
๐ธ ๐๐ฑ๐๐๐ฌ๐ฌ ๐๐๐ฌ๐ก ๐๐๐จ๐ฏ๐ ๐จ๐ฉ๐๐ซ๐๐ญ๐ข๐ง๐ ๐ง๐๐๐๐ฌ ๐ญ๐ฒ๐ฉ๐ข๐๐๐ฅ๐ฅ๐ฒ ๐ ๐๐ญ๐ฌ ๐ฉ๐๐ข๐ ๐จ๐ฎ๐ญ ๐ญ๐จ ๐ญ๐ก๐ ๐ฌ๐๐ฅ๐ฅ๐๐ซ ๐จ๐ง ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐ข๐จ๐ง ๐๐๐ฒ. That means, with careful planning, strong cash management can give founders a valuable extra top-up to their sale proceeds, which can be tax efficient.
๐ In the lead-up to a sale, founders should take a closer look at:
๐ธ Client credit terms
๐ธ Invoicing procedures
๐ธ Credit control discipline
๐ A key metric to keep in mind?
๐๐ฉ๐๐ซ๐๐ญ๐ข๐ง๐ ๐๐๐ฌ๐ก ๐๐ฅ๐จ๐ฐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ข๐๐๐๐ฅ๐ฅ๐ฒ ๐๐ ๐๐ซ๐จ๐ฎ๐ง๐ 80-90% ๐จ๐ ๐จ๐ฉ๐๐ซ๐๐ญ๐ข๐ง๐ ๐ฉ๐ซ๐จ๐๐ข๐ญ.
Ask your accountant or FD to track this ratio, it’s a powerful indicator of financial health and sale-readiness.
If you’re considering a sale in the next 12–36 months, now is the time to start optimising.