There are many ways of adding value to your business prior to selling it.
One such way, and one that most people don’t associate, is embedding sustainability, and having a robust and deliverable Carbon Reduction Plan.
The funds that often buy fast-growing small businesses view environmental, social and governance (ESG) factors as a significant value creator. It follows that by growing your business with that in mind, you can create more value. According to PwC, two-thirds (66%) of private-equity investors rank value creation as one of the top-three drivers of responsible investing.
So what is it about those businesses that embed sustainability that makes them worth more than those that don’t?
- They’re more profitable, with lower costs, less waste and more efficient processes.
- For businesses that own their premises, one which is thermally efficient and has low running costs is worth more than one that isn’t.
- They’re future fit. Pressure on businesses to report on carbon emissions reductions is coming down the line. It’s already mandatory for some suppliers to the public sector, and those business that supply to the plc’s. The thresholds at which carbon reporting is mandatory are coming down, and within a few years, it will be impossible to avoid.
- Consumers want it. ‘Green’ businesses have more loyal customers, and less price pressure placed upon them.
- Employees want it too. Those businesses that embed sustainability and ESG principles are more attractive to potential employees, and they enjoy better staff retention.
All of the above add real financial value to a business, and make it a much more attractive proposition to a potential buyer or investor, and at little cost. The perception the being a ‘Green’ business entails high cost is false.
So if you’re looking to get the best possible deal from a business sale or investment, and you want to elevate yourself and your business in the marketplace, committing to sustainability, and engaging meaningfully in the Net Zero Carbon agenda, is one of the best ways of doing so. It need not be difficult either, plenty of advice and support is available to those that seek it.
Ewan Bent 16th October 2023
