What Makes My Company Valuable
To Others?
- By
Stephen J. Kerr
People ask me whether having a Web site will
add any value to their company. I usually answer, "Not unless that Web
site brings in more business and profits." The big multiples are being
paid for content rich publishers. A strong front list, adds value; a
well performing back list, adds value; a focused editorial program, adds
value; and a good sales and marketing plan, adds value. For a post-production
house, printer or duplicator it always comes down to the issue of growth,
profits and the quality of the equipment.
Never assume that a buyer or investor will have
the same perception of value as you do. The old argument of, "If
only the buyer would do all the marketing that I should
have been doing, this company would be doing great." Does not
hold water.
Value is something that you build up in your
company, like bricks. You build a foundation with good products (titles)
or services, the bricks that form your structure are your customers,
and the mortar that holds the bricks together is called customer satisfaction.
I used to think that profits were the "Holy Grail"
in valuing a business, but after seven years of selling companies I have
come to know that it is far more complex than that. I have had listings
with 27% net profits - that would not sell, and companies with years
of losses that sold for a very handsome price.
Over the years one undeniable fact has emerged.
A successful sale must satisfy the needs of the buyer, not the seller.
Every buyer has their own agenda. When I am representing a company for
sale, it is the buyer's needs that must be understood and met. It is
their objections that must be overcome. The seller will be satisfied
with the price paid for the company when the buyer's hunger for the opportunity
overcomes their reluctance to spend their money. Value is a construct
in the mind of the buyer, not the seller. No appraisal by the broker
or desire on the part of the seller can influence that perception
of value. Our firm spends months preparing documentation on each
client so that we may heighten every buyer's perception of value.
That is our value added. My advertising professor in college told me,
"We do not invent desire…we awaken it."
It is the same with selling a valuable company
for a high price. We awaken the desire in buyers that need to own
your company. Make the buyer hungry for the opportunity and you will
not have to worry about the value paid.
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