Documentation of the company's competence: The path to a higher selling price

In today's competitive market, it's important to show potential buyers that you are in control and can document what makes your business valuable. A good documentation provides a clear picture of the company's unique strengths and potential, and can be a decisive factor when multiple stakeholders are considering purchases.

Build trust and credibility
‍When you can show off what your company is good at, you build trust and credibility. Buyers will feel more confident that they are investing in a well-run business with the right resources and expertise for further growth. This gives them a sense of security and predictability. The better the documentation, the easier it will be to convince of the company's value, which in turn can lead to a higher price tag. A well-documented business provides a clear picture of how the company works, what successes it has achieved, and what kind of potential lies in the future.

Efficient due diligence process
‍Havard Hammertrø is the general manager of Movit US, which offers financial advice in the buying and selling processes of companies. Håvard has assisted dozens of company transfers, and knows well what is important when a seller wants to achieve the highest possible price.

“The first thing we look for when a business is ready for sale is to obtain all documentation, and preferably it should be digital and easily accessible with a keystroke or two,” says Hammertrø. “It doesn't help that someone just has it in their head”.

An orderly overview of the skills of the employees, technology and work processes also makes the due diligence process much easier. When a buyer is going to go through all the details of the business, it is a great advantage to have everything taken care of. It shows that you are in control, which in turn can give you a stronger position in the negotiations. This also creates an efficient and painless process for both parties. Moreover, it helps to show what differentiates your company from the competition and what competitive advantages you have. A well-documented business gives you an advantage in the competition for the best buyers.

“In the modern economy, the competence of the employees is what is often the goal of a transaction by a company,” Hammertrø says.

What should be documented?
‍To ensure that the company achieves maximum value from a sale, it is smart to document its core competencies and expertise carefully. It involves describing what you are best at, who does what in the company and how the processes work in everyday life. In addition, it is advisable to collect customer experiences and references that show that the company delivers at a high level. These can be case studies, customer feedback and concrete examples of value creation. Don't forget technological resources such as IT solutions and patents, as this can be an important part of the value, especially for technology-driven companies.

“A good business plan underpins the credibility that others can succeed with your company after an acquisition. Documenting the company's expertise is an important part of a good business plan.”, says Håvard.

Start Documentation Early
‍It's never too early to start with documentation, and it pays to look at it as an ongoing process rather than something that needs to be done at the last minute before a sale. A continuous process ensures that all information is up to date, relevant and presented in a professional manner. Feel free to use professional advisors for help in structuring and presenting the information in an orderly and attractive manner. They can provide valuable input into how the information should be organized to be as compelling as possible. Digital solutions can also make the job easier by keeping documentation up-to-date and easily accessible to internal and external stakeholders.

Create an attractive organization
‍Ultimately, it's about making the business as attractive as possible to potential buyers. By investing time and resources in documenting what you can and how you work, you position yourself more strongly when the time comes to sell. A thorough documentation can be the key to a better deal and a higher price for the business. It is worth considering that a well-documented business can also contribute to better day-to-day operations, as it gives employees a clear understanding of the company's goals and strategies.

Documenting a company's expertise is not only useful in a sale, it can also help attract new partners, investors and talent. When competencies and processes are well documented, it becomes easier to communicate what the company stands for and what values it delivers. This can help build a stronger reputation and ensure steady growth over time.

“Perhaps the two most important questions you should ask yourself when selling your company are why someone should want to buy it, and what the company looks like from the buyer's point of view,” concludes Hammertrø.