Value Enhancement Checklist

Overall salability

·   Perform periodic (we suggest quarterly) analysis of approximate value levels of the company, based on a simple multiple of pretax earnings calculation; seek outside expert advice for comparative multiples common in your industry.

·   Develop a file of press clippings with historical information about related industry buy or sell transactions which have occurred in recent times.

·   Build a press file with clippings on company progress, awards, and newsworthy events.

·   Develop a listing of all intangible assets owned, and use such listing as a checklist to ensure keeping patents, copyrights, license agreements, or any other assets of this sort current and up-to-date.

·   Prepare at least an annual SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats, and utilize information gleaned to enhance action plans for the coming year.

·   Review compliance history with ERISA, the IRS, and with Sales and other tax authorities, with focused attention upon "cleaning up" any pending issues or risk areas.

I. Financial

A. Develop solid and steadily improving targets for prime financial objectives, including:

   1. Pretax earnings, as a percentage of sales

   2. Sales growth, as a percentage, per year

   3. Gross profit margins

   4. Debt levels (object here is declining)

B. Plan to "clean up" all balance sheet items, writing off any unusable or non-salable items on the balance sheet, and making sure all liabilities are reasonably and conservatively stated.

C. Prepare an annual budget of planned financial performance, and become accustomed to utilizing this tool to site any problems or changes which might require attention.

D. Obtain any available key financial statistics from others in your industry, and compare and analyze your reports relative to other norms, to both know your strengths, and to monitor and correct potential deficiencies.

E. Evaluate and enhance financial reporting systems, to ensure, a) timely and quick internal statement availability (preferably within 7-10 days of each month end, b) minimal "audit" or review adjustments at the end of each fiscal year, c) reliable and well-policed inventories of all active and current contractual commitments, d) regular monthly compliance checks to ensure adherence to all loan covenants, and e) up-to-date corporate minutes.

II. Marketing and Sales

A. Develop quality hard-copy brochures of products or projects being sold.

B. Develop a photo file of products or processes successfully completed.

C. Consider a customer satisfaction survey, to document results, and to provide feedback for any areas needing remedial attention.

D. Track sales order backlogs, or prospective sales lead inventories regularly, and begin to monitor year-to-date trends of such prospect or backlog reports to same reports from prior years.

E. Analyze top customers with > 5% of company volume, and work on long term sales contracts, special services, or other mechanisms you might develop to solidify such relationships.

F.   If you use dealers or reps for sales efforts, periodically do an evaluation of quality and range, and develop a long term plan for continuous enhancement of network.

G. Develop a positive PR plan within your industry, to build reputation.

III. Staff

A. Assess organizational management strengths, and target development of at least two tiers of potential leadership within each major area; try to ensure that no single individual manager has direct report responsibility for more than 6 individuals (except at the lowest and simplest levels).

B. Consider implementing a policy with non-competes for people in management posts, and confidentiality requirements with secrecy agreements for anyone who deals in proprietary confidential information.

C. Build a plan to ensure key customer contact with more than one person in the organization.

D. Inventory your management strengths, with special attention to anyone 55 or older, to ensure you have identified potential developing people as possible future replacements.

IV.   Property and Equipment

A. Build a photo file with clear quality photographs of all facilities. If possible also maintain blueprints or floor plans of all key facilities.

B. Consider an appraisal of real property owned by the company.

C. Consider equipment appraisals, and/ or equipment replacement cost analyses for files.

D. Take an "outsider" look at plant and offices, to ascertain clean-up needed well ahead of prospective buyer visits.

E. Assess any compliance issues with OSHA, EPA, water, sewer, or clean air authorities (if applicable), or other governmental agencies or authorities. Develop plans to move to a clean bill of health in all areas in advance of sale.

F. Consider a Phase I environmental review, if you have never had one done.