Buyers are picky. Here’s what you need to do to excite them.
What is your company really worth? Whatever a potential buyer is willing to pay. But there are ways to increase the value of your company in perceptions and desires of the buyer.
Recently, we sold a telecommunications company for $7 million dollars more than even the owners thought it was worth. How? The owners had established a solid reputation of on time and on budget project delivery with large clients that had resulted in long-term contracts. These contracts, and their great reputation, limited their competition and enhanced their opportunity for future growth.
Here are the 7 things you need to excite a buyer for your business.
1. A Scalable Business
The systems and procedures you use to operate must be relatively easy to duplicate in other locations or to serve a larger customer base. Efficiency is the key. The more customers you can serve the more profitable and attractive the business will be.
2. A Steady Revenue Stream
Ideally, this includes long-term contracts with established customers and a steady growth rate that ensures sales will continue to remain steady and have the potential to increase in the future.
Companies with a broad and diverse customer base are more valuable. Their revenue stream is more stable and less susceptible to market fluctuations.
3. Proprietary Technology
Technology that you own provides you a competitive advantage and increases company value, because it sets your company apart from the competition and would provide new owners the same advantage.
4. Intellectual Property
Owning patent rights can provide a big boost in company value, especially if the patent is the key to securing future sales. Often corporate buyers seek out
smaller companies who own patents to purchase to provide the acquirer an advantage in the larger market.
5. Brand Recognition
Branding can be built across time. However, effective marketing and great customer service are two keys to building a company brand that adds value.
6. Irreplaceable Employees
Employees with highly desirable skills, or sales teams with well-established industry connections boost company values, because those skills and connections will enable the buyer to be more competitive and ideally use the connections to expand sales.
7. Competitive Advantage
Identify what sets you apart from your competitors. It may be a unique process, location, service, etc. Then you can use that advantage to win more customers and build value.
Potential buyers are interested in your company for a specific reason. Once you know what they are most interested in, you can enhance that ability or characteristic to increase company value. Investors are looking for well-managed, successful companies that have set themselves apart from the competition. Investors seek out companies that will immediately add value and profitability to their portfolio or raise their corporate performance. Market to these demands and you will sell your company fast and at a great profit.