10 THINGS THAT MAKE YOUR BUSINESS MORE VALUABLE
Investment guru, Warren Buffet is renowned globally for his rigid principles and investment philosophies. When it comes to buying and selling he has proven over the decades that not all investments (or investors) are created equal and adherence to strict investment principles provides the best results.
Warren has built his vast empire based on his ability to see value where others do not. He knows, above all else that "Price is what you pay and value is what you get".
So what does this statement mean? Price as we all know is simply the amount of currency that changes hands. Sure deals are often done with a mix of cash, shares, earn out agreements, etc however all are easily translated back at a point in time to an amount of currency.
Value on the other hand is a little less easily quantified.
Fair value is the accepted measure of business value which assumes the purchase of a business by a financial buyer (one that is motivated simply by a return on investment). However
businesses are rarely bought and sold at fair value. Businesses are usually bought by those with some level of strategic reasoning for making the acquisition (these buyers are known as strategic acquirers). Strategic acquirers may pay more than the fair value of the business as they see value where the financial acquirer does not.
So it seems that value is therefore somewhat subjective and where the value of a business sits will ultimately depend on your position as a buyer in the market. Value can be clear and accessible for some, but impossible to achieve for another and therefore not valuable. What is clear is that value is dependent upon the perceptions and motivations of the buyer and all buyers will therefore be different.
So how do you make your business more valuable. First of all you need to think like a buyer. Consider the following for your business.
Please also take advantage of our free assessment tool that rates how valuable your business is against 8 key drivers of business value. It takes just a few minutes and you will instantly receive your free Value Builder report.