When looking to sell your company, the difference in valuation could be significant
It’s common to hear an owner or CEO express their belief that their company is the best versus the competition in all or some aspect of what they provide to the market. Hopefully this is true for your company but here are a few important things to think about:
- How are you determining that you are the best, what tangible information are you basing this on?
- How do you know that a competitor hasn’t caught up? Market competition changes over time, when was the last time you looked externally to confirm your belief?
- If challenged (one day by an acquirer), what tangible proof can you share to confirm the “we’re the best” claim?
- Are your customers rewarding you either in giving you a greater percentage of their available business and/or rewarding you in paying a premium for your product or service as their way of showing they place tangible value on you being the best? Or are you deeming your company the best in an area but it’s not translating to value your customer is willing to pay for?
- In the area you are the best, what could you do to evolve this further to make your company the ONLY, not just the best?
Acquirers regularly hear Seller’s claim to be the best in some aspect of their company. They are willing to accept this but not only on face value. If you want to impress an acquirer and get them to pay a premium for your business one day, find a way to be the only or sole source provider to your customers in some aspect of what you offer the market. Doing so with a meaningful revenue and profit and projecting a future where you can show this can scale and be defensible to benefit the acquirer, will put you well on your way to achieving your future euphoric exit event.
Talk with your team….change the paradigm from being the best to being the only.
