Did you know that it’s entirely possible to build a company that is incredibly valuable to you as the owner but that no one wants to buy? True.
Imagine for a minute that you run a thriving aerospace manufacturing plant that throws off a few million a year in earnings – and has for the last decade. Sounds great, right? What if that same company has only one customer? I ran into a version of this company recently – the owner lived a lavish lifestyle, employees were happy, and their single customer seemed pretty pleased with their performance. The only problem? No one is buying that company – at least not without a massive discount on the price.
We call this concept of how the market looks at an asset – Market Attractiveness. Attractiveness encompasses many factors – margins, overreliance on an owner, single points of failure such as customer concentration, and many others.
Related: You probably don’t know the actual value of your company.
Value Scout starts to quantify these issues when we run the Market Attractiveness Indicator, giving you a road map for building a company that is not just profitable to you as the owner but Attractive (read: higher valued) for potential buyers.