One important thing to look at when considering the future value of your company would be looking at it from the buyers eyes. What would they be likely to be picking up? Looking ahead like this gives you a clue to what a buyer might think is important and it can be a valuable aide to you in the short-term decisions that you have to make. It can protect you from cutting into bone and doing some things that might hurt the long-term valuation. It can help you focus on what areas should you putting resources into and what areas would not be as important that you could perhaps harvest or let slide some.

So, what are some of the things that somebody might acquire? Here are just a few of the possibilities:

1. Your people. Particular in a technology venture, your people might be a real key.

2. Your patents. What kind of intellectual property do you have?

3. Your facilities and equipment. What fixed assets would you have that might be a greater appeal?

4. Your customer base. This could have value beyond just your venture because a new buyer might be able to leverage your customer base even more.

5. Your contracts. Do you have contracts that go out for extended periods of time? Do they call for automatic renewal? Do you have significant leverage over the customer? It makes them less likely to switch. This could solidify the future cash flow from the company and really be a tremendous asset for the buyer to pick up.

6. Working capital. What things from working capital might buyer be picking up, such as inventory or accounts receivable?

7. Favorable financing. You might have very favorable financing at below rates for debt that could be very attractive.

So, there could be a number of different things in particular that your buyer could be picking up down the road with the sale of the company. Look ahead, think on what those things are and then do what you can to grow and protect those things by putting your resources in the right direction several years ahead.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value