Business Valuation Firms Help Companies Facing Catastrophe Strategize Early to Increase Results

By Sarah Simmons

With the economy in the deepest recession it has seen in decades, many companies are struggling to stay in business by reorganizing, filing for bankruptcy or, unfortunately, liquidating groups of assets or the entire business. However, these decisions should be made months in advance - not at the time of crisis. Even if you are busy focusing on turning around your company, it is essential to plan for disaster. You may not want to think about this possibility, but by planning in advance - just in case - the value received from the sale of your company's assets can be dramatically improved, oftentimes by multiples of what would be realized in a liquidation and/or public auction.

Hindsight is always 20/20, but substituting hindsight with foresight can be even better than 20/20 vision. Preparing a comprehensive liquidation strategy for your company in advance can ensure your catastrophe won't be catastrophic. While all companies are different, there are several factors that should be carefully considered by any company at the first sign of financial difficulty.

Inventory Monitoring

Before any obvious signs of trouble appear, monitoring your inventory can provide you with a warning signal. You probably already manage your inventory on a go forward basis, but customized reports can be developed that highlight changes in the quantities of key inventory components and help improve inventory management when cash is tight. This can provide you with the opportunity to be proactive about dispositions of slow moving, obsolete and/or non-strategic inventory to create the working capital needed to maintain critical operations. A good investment recovery company can help you creatively manage the controlled disposition of inventory during the normal course of business without raising any concerns among existing customers or in the overall marketplace.

Essential Employees

Should your business flounder, laying off personnel may be the first thing that comes to your mind when cutting costs, but during liquidation, key personnel can be essential to maximizing your value. The goal is to know exactly who these essential employees are before it is too late. Many of your integral personnel can be kept on staff with suitable financial incentives which can be budgeted for in advance. When considering who is essential, keep in mind who will be needed to shutdown machinery or plant systems, who can help complete major transactions, or who is the most familiar with your company's information technology or financial information.

Company Production Information

If your company or plant has shut down, buyers can't know the full potential your business offers. By collecting company production information such as product samples, photographs, historical production reports, maintenance records, and even video, everything necessary is available to provide buyers with the facts needed to make an informed purchase decision. This information is the next best thing to seeing the plant operating and can be leveraged immediately in negotiated sales as well as in online and on-site auctions.

Intellectual Property

Assembling, cataloging and securing the detailed information regarding your company's intellectual property (IP) should be done with great care. You will want it available so that qualified buyers will have the necessary information needed to enter into a competitive bidding environment. By investing time in this organization and preparation,, you can maximize the value of your IP.

Bundling Strategies

Simply moving straight to a public auction after your business fails can result in money being left on the table. By preparing ahead of time, you can bundle certain assets no longer strategic to your company, such as product lines, specialized machinery, dedicated inventory, customized real estate, customer lists, accounts receivables and more, and offer them to pertinent buyers. Preparing in this way can often mean the difference between realizing huge premiums and suffering huge losses.

Start Now

Even if your company or business is healthy and in-the-black, it never hurts to be prepared - especially in this economy. No one wants to think about failure, but planning for the worst often brings out the best circumstance. By hiring an experienced consultant who understands what makes your assets valuable, you can prepare a successful back up plan that can mitigate your losses in the event of a crisis.

AccuVal is a global valuation and consulting firm that helps companies "up" their success. They provide a broad range of [http://www.accuval.net/]business valuations and asset management solutions, including goodwill impairment, fresh start accounting, purchase price allocation, [http://www.accuval.net/services/valuation_advisory/tax_management/409a-valuation.php]409a valuation, and trademark valuation, that empower companies to confidently make strategic business decisions and achieve greater success.

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