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123rf57671917 lareIt is often said that perception becomes reality. Something perceived as new, young or innovative has a higher perceived value in the market. Similarly, a company for sale can see an increase or decrease in interest based on how it is perceived by buyers. The site visit by the buyer can cause them to accelerate interest in the opportunity or leave skid marks in the driveway.

Buyers aren’t looking for the smell of brand new leather chairs or the latest gadgets in every office but

they are interested in qualities that give them comfort about the company they may potentially buy and allow them to brag to their friends.

they are interested in qualities that give them comfort about the company they may potentially buy and allow them to brag to their friends.

Ask yourself questions such as:

  • Is the office and warehouse space neat and efficiently used or does it give the feeling that things are scattered because there is too much space or cramped because there is not enough space?
  • Do the employee areas have sufficient lighting and provide the feeling of being in a successful enterprise or the darkness and drabness of a business trying to survive?
  • Are the phones, the computers and the office equipment relatively up to date or do they belong in the Smithsonian?

Case Study: The Dog

We were asked some time ago to assist a business owner to determine the market value of his business. We visited the office and saw inventory items going back 20 years, which were stored alongside the current inventory…and old hockey equipment, fax machines, and a very old couch.

His office had more paper in it than an Iron Mountain location (and an overly friendly dog).

His office had more paper in it than an Iron Mountain location (and an overly friendly dog).

The kicker was when we received the current financial information on green and white dot matrix printer paper!

None of these things affected the objective valuation of this company. The business filled a need,

it made a decent profit and it had a sustainable value, but we also knew that after touring the business, half to three quarters of interested buyers would never go near it again.

it made a decent profit and it had a sustainable value, but we also knew that after touring the business, half to three quarters of interested buyers would never go near it again.

Question #1 “What does your company do?”

Business owners are asked this question hundreds of times. Answers can be simple: “We are a machine shop,” “We distribute medical supplies,” or “We provide phone messages.”

Yawn.

They can also make the questioner sit up and listen

They can also make the questioner sit up and listen “We are the leading manufacturer of bubbler cylinders in the world,” “We supply every major hospital in New England with cutting-edge disposable supplies,” or “We are the largest telecommunications voiceover company in the Northeast.”

Being a leader in your field is not only a feather in your cap, but also a key tool in the sale of your business.

Buyers want to buy a company they can brag about

Buyers want to buy a company they can brag about to their friends, their spouse, and their former colleagues. They want a company that is a leader in their market.

Buyers will pay a premium for a company’s unique market position,

Buyers will pay a premium for a company’s unique market position, one that cannot be easily overcome “by throwing money at it” with price competition or innovation.

Know the aspects of your business where you are the leader and exploit these differences. If you are not a leader, then becoming one in some aspect of your business will tend to have a positive impact on the sale of the company.

As professional business trainers and coaches, helping companies stand out as prime prospects for acquisition and a big return to the owners is our specialty.

Coming next month: “Brain Drain and 2nd Tier Management”

-by Greg DeSimone - Beacon Equity Advisors, Inc.

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