Understand How the Market Sees You

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.
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Author Summary

Dan Doran

Dan Doran

Is the Founder of Value Scout, Quantive and the 2019 Exit Planner of the Year. He is a recognized expert and speaks frequently about M&A, valuations, and developing more deliberate value creation strategies.

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