M&A Company Valuation: Trim Staff and Cut Dead Weight

If you want to maximize the company’s valuation before heading in to an M&A deal, you need to maximize the company’s profits. One way is to reduce and eliminate wasteful expenditures, and because the largest expense of most businesses is personnel, you may have to make some difficult decisions.

Please don’t read this suggestion as a license to be capricious or cruel. Don’t start firing staffers simply for the sake of cutting positions. Make a determination of what personnel you need to run the business and simply execute on that decision.

Don’t be afraid to be tough. No one likes to let people go; it’s difficult. But if certain employees aren’t pulling their weight or aren’t performing up to expectations, you need to lay them off. If an otherwise-good employee is in a low/no value position, either move that employee into a productive role or bite the bullet and let him go.

If some staffers are on the edge, give them a chance to improve. Set realistic goals and give them the tools to succeed. People respond to this challenge in one of two ways: Either they step up and improve their performance to a tolerable level or they quit. Either option is a suitable outcome.

dummies

Source:http://www.dummies.com/how-to/content/ma-company-valuation-trim-staff-and-cut-dead-weigh.html