Stand out against the competition
Benchmarking is a process to compare the financial and operating metrics of your company to the industry as a whole. For example, how does your company’s gross margin compare to the average gross margin of companies in your industry?
A better metric than that of the industry as a whole could indicate that your firm is worth more than the average firm in your industry. During the sales process you might want to call out:
Excellence at a certain process or practice
Long-term relationships in purchasing raw materials
Higher gross margins
You might want to work on poorer metrics before sale. For example, good inventory management practices can benefit you in a sale.
- Improved inventory turnover can make your company look more valuable.
- Documenting the inventory needed to be reliable without incurring unusually high financing costs is valuable to you and the buyer.
Benchmarking can give you an idea of what the optimum inventory level is for your industry. It may be possible to reduce inventory and pocket some cash ahead of a sale. If you don’t, you can be sure the buyer will do it right after the sale closes.
To perform benchmarking, you need industry data. Below you can download data on middle market companies ($100-500 million) in various industries. If you don’t see your industry, email us, and we would be happy to generate benchmarking data for you.
If you have a company with over $10 million in revenue, and you’d like us to perform a custom benchmarking exercise for free, email us and a representative will be in contact with you.
Care to find out more? Complete the following and we will be in touch.
Benchmarking
