Instructions: Review this list and identify any of these factors that a larger industry buyer would be able to leverage to grow revenues after they have acquired your company. For example: Computer Database – OUR COMPANY has a database of 2,000 current and former customers with complete contact information including email address. We also have a prospect database of over 20,000 potential clients. Now copy this ASSET INVENTORY CHECKLIST into a Word document, check ones that apply, write a brief description of your company’s strategic asset to replace the description provided in the CHECKLIST. As you build your business for your eventual exit, focus on further developing the assets you already have and nurture the development of others that may be relevant to your business.
Advertising campaign – A proven campaign that is effective in driving additional business
Advertising materials – Fully developed advertising messaging and collateral materials
Assignable contracts – A clause in customer contracts that allows transfer upon change in ownership
Backlog – Self explanatory. Wouldn’t we all like to have Boeing’s 7 year backlog?
Barriers to entry – Takes on many forms from difficult regulatory environment, to licenses and permits, to complexity of technology and many more
Blue Chip Customers – Very valuable and difficult to obtain in a competitive market
Branding – Ask Coke, Apple, McDonalds – same status in your industry niche
Computer database – You have digitized your company’s assets – customers, personnel, prospects, procedures, trade secrets, manuals, etc.
Computer designs – CAD CAM and other engineering digital assets
Copyrights – Depending on your industry can be hugely valuable
Cost to duplicate your technology – Whether it is software, a biologic medicine, a specialized process, etc, it would be far cheaper and faster to buy than develop
Credit files – Industry specific value.
Custom-built factory – Competitive advantage for keeping down cost of production
Delivery systems – Not just limited to Logistics providers.
Distributorship – A well developed distribution channel is highly scalable
Employee manual – Valuable from a cultural asset to liability protection
Employee turnover – A low level of turnover indicates a very attractive work environment. Turnover is very expensive.
Employee on-boarding process – Think Zappos – the process promotes long term employee retention
Experienced design staff – History of product success very difficult to duplicate or replace
Favorable financing – Proven banking relationships provide more options and flexibility
Franchises – Successful business model for efficient rapid growth
Government programs – Getting approval is difficult and time consuming – barrier to entry
Growing industry – Natural enhancer to company growth rate and improved valuation multiple
High cost to acquire customers – If it requires long sales cycle and skilled salesmen, your install base has high value because it cost dearly to obtain
Integrated CRM system – Not just having one, but implementing industry best practices around populating it and leveraging it to drive and support business
Key employee agreements – Benefit everything from retention, to IP protection, to non-compete
Know-how – What is your company’s specialized knowledge that gives you a competitive advantage? Sales system, technology, value proposition, subject matter expert
Licenses/Permits – From land fill permits to a grandfathered liquor license, whatever approvals that are difficult to obtain provide barriers to entry
Limited customer concentration – No customer accounting for more than 5% of total business reduces your risk and the risk of a potential buyer
Local economy – The trend is your friend. A thriving local economy is good for business
Location – Whether it is a prime corner in retail or availability of skilled workers, location can be a big advantage
Long-term contracts – Huge value in predictability of revenues and very important risk reduction for a potential business buyer
Loyal customer base – Stability of earnings and fertile ground for new product offerings
Mailing list (email list) – Valuable source of new business
Management – Highly valued for contribution to current owner’s business and highly coveted for a potential buyer of the business
Multi-channel distribution – Reduces the risk of customer defections from nimble competitors with minimum overhead
Name recognition – See Branding
New markets (industries) Can your current products be positioned to appeal to new industries
New markets (geography) – Can your current products be distributed t to new geographic markets
Outbound sales system – Expensive to implement and maintain. Most are under performing
Patents – Sometimes the value for a smaller company is your willingness to defend them. For a large company buyer they are highly valued
Pricing power with new owner – Very subtle, but highly strategic and valuable. In the market you discount to compete against brand player. If you are acquired by brand player, they can raise prices across the board
Proprietary designs – IP not necessarily on balance sheet but important competitive differentiator
Published articles – Viewed as subject matter expert, industry status, invited speaker at industry events, great “free” marketing resource
Recession-resistant industry – Highly valued by financial buyers as well as strategic buyers with a portfolio of cyclical properties
Recurring revenue model – The magic business model. Most software companies are converting to this model as SaaS. Reduces risk and smoothes out revenues
Regulatory advantage Give me an edge. Railroads, pipelines, landfills, what is yours?
Reputation – With big companies it is brand, small companies it is reputation – very valuable no matter what you call it
Royalty agreements – Ask the song writers, actors, drug discoverers what they think about this as a business model. Even more magical than recurring revenue model. Here you produce once and it returns over and over
Scalable business model – Very important for a small business owner whose limitations are risk tolerance and access to capital. A strategic buyer will recognize this potential
Security clearances – Very important for government contracts and security work. These alone can make your company by a large company looking for those clearances.
Skilled employees – Hard to get, motivate and retain. If your company has them, the strategic buyers see their value.
Social media momentum – For the uninitiated, this is a significant investment on the front end. Once established, it is a highly scalable business advantage
Strong referenceable accounts – No better source of new business than good old fashion referrals
Supplier base – A valuable asset of familiarity, trust, and execution
System & procedures – Technology is not the only area of innovation. Better management systems, executive dash boards, agile development are value drivers
Technology – Take your pick of industry, superior technology properly managed results in company competitive advantage
Thought leadership – Whether speaking, publishing or being interviewed, this carries the halo of business excellence and provides valuable company vibe
Time to market advantage – Very subtle but important strategic value driver. What do you have operational that a big company could duplicate in two years? How much business do they lose while in development?
Tooling – Big investment may be completely depreciated on the balance sheet, but the reality is it is more valuable than its original cost
Trademarks – Valuable to the extent that you leverage them to either drive business or fend off competition. May have greater value to large company buyer.
Trade secrets – Your company’s special sauce. You know what it means to you. Now think how a deep pockets company buyer could leverage it.
Training procedures – Legendary at Xerox and IBM. On a smaller scale it can make your team a top performer. A buying company could learn from you.