What is your company’s worth? If you’re the owner or CEO of your company, the answer ‘As Much As Possible’ isn’t a given in today’s competitive marketplace. In fact, the market is rapidly changing as sophisticated financial engineering software allows most ‘accounting books’ to comply with pre-determined formulas and ratios that equalize the playing field to the point of diminishing distinction. Simply put, if buyers can put you in the matrix, your company’s valuation can be heavily discounted. If you want to get HIGHER MULTIPLES, you’ve got to do MORE to create a competitive advantage that jumps out of the matrix, and it begins with your ‘brand.’
At the Borenstein Group, we advise CEOs to consider the following five branding techniques to help boost their Government Contracting valuation above and beyond their ‘book value.’
1. The Medium is The Message: Your website is no longer just your online brochure. It is a direct reflection of how you view technology. So, if your website still uses old Flash animations to show videos, when most of us have moved to Apple iPad as the business standard, most of your audience will see a ‘blank box’ in the middle of their screen. If you are an IT company, it tells the acquirer or investor that you are an unsophisticated seller that doesn’t understand where the relevant decision makers consume their information. So, why should they believe that you can be part of their corporate future?
2. Are You a Doer or a Leader? Buyers and investors are not only looking for a strong management team with proven experience, but also proof points that your company is well positioned as a thought leader in the areas of expertise that you claim. Saying ‘what you do’ without having strong editorial opinions about future trends in cloud computing, for example, demonstrates to a potential suitor that you are a lower-level thinker that is not capable of being a trusted advisor to clients. So, why should they pay a premium above book value for you?
3. Are You Showing Your Past Performances or Business Case Studies? Money-people are looking for proof-points that you not only performed on budget, on time and on target for a government agency according to the Performance Work Statement, but delivered business impact for your clients. Often, a shorter business case study that connects the mission of the program you supported to achieve the business objectives can dramatically realign the perception of your potential buyer of what they are actually buying. Remember, they are looking for your footprint so they can expand it, not simply to ‘retain it.’ Why would they believe they can cultivate the relationship unless there was actual business impact?
4. It’s Not Who You Know. It’s Who is Chatting about You. Paraphrasing the overused-but-true adage, prospective buyers aren’t simply interested in your self-certified truths about the fact you are the greatest buy in the market. So, in the age of Google and social media, scrutinizing investors are more likely to look at your company’s LinkedIn Profile, your key manager’s profiles, to see who links to you. They will be looking more closely, without ever talking to you, at your Facebook page to see if your employee culture is alive or if it is it a bunch of stiffs or butts in seats that never think for themselves. Moreover, the savvy ones will also look at your GlassDoor employee reviews to note if there is any weakness they can exploit to negotiate the price down. For example, imagine that you are selling them on the notion that your corporate culture is an A+ and that a smooth transition will be a piece-of-cake, and they read 10 bad reviews on GlassDoor from disgruntled employees that specifically accuse you, as the CEO or management, of being dictatorial, inefficient, and a backwards thinker.
5. Don’t be Anti-Semantic. Your ‘pitch deck’ contains a descriptor of your lines of business and provides a strategic opportunity for you to elevate your company’s valuation to your potential suitors by simply selecting the proper terms that show you are not simply a ‘reseller’ but a management consultant with technology to boot. Semantically, being a Microsoft Solutions Provider and a MicroStrategy partner only means that you are selling their licenses. It does not mean you truly understand Business Intelligence, Big Data, Business Processes, and the organizational impact it has on your particular agency-clients where you possess a deep bench of institutional knowledge. However, semantically speaking, imagine if you began the same conversation by showing that you are the master of Business Intelligence in the federal agency where you help them assess, plan, strategize and deploy a Business Intelligence solution to help maximize operational efficiency, using XYZ brand of software. Which one communicates the greater value?
Bottom line: The ‘Book Value’ of a company is the rather ‘obvious’ part that could be easily put in a matrix and draw little to no distinction between you and the other companies in the M&A portfolio of prospects. The ‘brand value’ allows you to yield a higher premium of ‘good will’ that comes by pre-engineering your branding to lead the investors to think of you in terms of the ‘future,’ not just the past, creating a higher measure for your success.
Borenstein Group offers a confidential assessment for CEOs of their current ‘brand valuation’ so they can ascertain what branding techniques could help them yield higher multiples when the time is ripe. It’s never too soon to plan. If interested, give us a call at 703-385-8178 x28 or contact us.