In a prior article in this series we talked about the trade-offs related to the relative size of a company in comparison to its market position. However, if you look at a company’s size and compare it to its valuation, bigger is almost always better. Organic...
If you’re wondering what your business might be worth to an acquirer, there is a simple calculation you can use. Let’s call it “The Build vs. Buy Equation”. At some point, every acquirer does the math and calculates how much it would cost to re-create what you’ve...
Every business wants to grow, but as it grows it often changes and some parts of the business may no longer be a good fit. When that happens, the company should consider selling that part of the business. That is called divesting. The principle behind divestment...
Are you a big fish in a small pond? Have you become the preeminent supplier in your market niche? If so, it can be a good news/bad news situation for a potential acquirer. The good news is that you likely have good name recognition and great...
Imagine you’re a farmer and you’ve been tending to your crops all year. It’s harvest season and finally time to collect the spoils of your labor. You start harvesting your crops only to find out that pesky rodents have been quietly eating away at your fields....
Are your customers an asset? They could be a core part of your value to a potential acquirer. But that value is directly related to the strength of your relationship with those customers. Are your customers raving fans? Do they provide you with recurring revenue? Do...
If your goal is to grow your business fast, you need a positive cash flow cycle or the ability to raise money at a feverish pace. Anything less and you will quickly grow yourself out of business. A positive cash flow cycle simply means you get...
It may be surprising but there are times when a buyer may value your management team and employees more than your products or revenue. Your key leaders, your research and development team, a strong sales force, or subject matter experts may be the missing piece...
If you’re trying to figure out what your business might be worth, it’s helpful to consider what acquirers are paying for companies like yours these days. A little Internet research will probably reveal that a business like yours trades for a multiple of your pre-tax profit,...
In the previous article in this series we discussed the importance of scalability and defensibility in building value in a company. A key means to achieving both is establishing unique intellectual property as an asset of the company. What is the ‘secret sauce’ that your company...