How Little Decisions Could Have a Big Impact on Your Acquisition Valuation
This video is an excerpt from the “Grow Your Damn Business” Podcast with Scott Goodrich. The episode is entitled “Insights on Crafting Marketable and Resilient Businesses with Marty Fahncke”, and you just might learn a thing or two if you check out the full episode at the links below…
Listen: https://player.captivate.fm/episode/587125a1-cdad-4254-8025-cec2326a2643
Watch: https://www.youtube.com/watch?v=Uwg3tdfAIYQ
Transcript:
So if you have a business that you are operating with the intention of growing or maintaining for a long period of time, you will make decisions differently than if you have a business that you have an intention of selling in two to three years or one year or whatever that is. And so a lot of times owners don’t think about certain decisions that they make.
For example, we just had a client not too long ago that made a decision to install a pretty aggressive software in place. It was a CRM software, and they went down the road with a particular CRM, made that decision to install it. What they didn’t think about was the fact that 90% of the potential acquiring companies that might buy them later, used a different one. They decided, “We like this one because it’s where we are unique.” But what they did was they made their business less sellable because 90% of the people who were going to buy them look like “Oh man. We’re going to have to completely move them off of this platform and into this platform.” Whereas, if they would have kept it on the platform that was the industry standard, that would have been on the plus column as far as valuation and ease of transformation. Had I been involved when they made a decision?
“I know you kind of like these three features of this other software better, and you think that it might serve your needs better in the short term, but you’re thinking about selling this business, let’s look at the strategic acquirers that are going to come in and pay tens of millions of dollars for your company, what are they using?”
To learn more about Marty Fahncke, Business Acquisitions, and Westbound Road visit our website: https://www.westboundroad.com
