How will the future acquirer view your business when placing a value on it
Every day we view our business through the natural lens of our eyes. However, when the day comes that you want to present your business to potential acquirers, do you know how they will view your business as they look at it through their lens? Use time as a friend to start thinking about this and preparing a business that will present well in their eyes. Here are some questions to facilitate healthy dialog between you and your team on this topic:
Will a future potential acquirer view our company as a single business comprised of complementary products and services or will they view our portfolio as lacking complement, and as a result, will view our offering almost as multiple businesses under the umbrella of a single company?
- As an example, you have a direct-to-consumer business where you sell pet products to consumers and as part of this same company you also have a light assembly shop where you make surgical tools for veterinarians. You view your business as a single company serving the pet industry. But will your future acquirer want both aspects of this business, or will they view one of value to them and the other possibly not a fit?
Will they view your customer base as highly attractive or will they view it as not being the more quality types of customers available within your industry?
- Think about this question as it relates to in every industry, there are what is considered quality customers and not so quality customers. Lower quality customers may constantly pressure you for lower prices, extended payment terms or just generally well known for being difficult to work with.
Will they view your company as being well positioned to avoid being disrupted and/or well positioned to play the role of disrupter in your industry?
- An acquirer will generally be attuned to what trends are already impacting or may soon impact your industry and business. Will they view your company as being well prepared to avoid any disruptions that might occur as a result of these trends or will they see a risk that you are not preparing for what they may mean to your profitable growth?
These are just a few of the many questions to consider but the key is challenging yourself to view your business through two sets of lenses, yours and that of a future potential acquirer. Doing so could help you in making important business decisions now and help build the future exit valuation of your firm in their eyes.
