The Value in your business
The value of a business is more than its cash flow. Although many Australian business owners and management teams have been left pondering their future after a turbulent 12 months, it is important for those moving towards a sale to focus on identifying the strength of their underlying or intangible assets and the potential of these assets to drive future value.
Today, intangible assets such as Brand, data, content, software, customer and supplier relationships, regulatory approvals, and confidential information, account for over 90 percent of all company value. These assets are the key drivers of growth and profitability for virtually every business and in particular in areas such as Childcare.
Your Brand in the marketplace is now one of the most critical drivers of a business. Recognition of name/logo, your unique services, community participation at a local level and a social media level.
Understand where the value lies
Some valuers and brokers may claim that you can’t assign value to a company’s data, patents, confidential information, software code, regulatory approvals, relationships, or brand, but this simply isn’t true.
Today, intangible assets are likely to be the most valuable assets a company owns – but it is likely that the majority of these assets will be lying off the balance sheet. When you look at the world’s three most valuable companies (Saudi Aramco, Microsoft, and Apple) they are examples of how this is a fact, with trillions of dollars of value being driven by their intangible assets and almost all of it lying off their balance sheets.
And, if you look at businesses that are thriving, it is primarily those that have greater concentrations of high-value intangible assets. These companies are leveraging their assets to achieve faster growth and stronger earnings and are also demonstrating more resilience to market volatility than those companies that have a greater focus on fixed assets.
To be in this camp, it is important that you start to identify and define those assets that are driving value in your business. By developing a plan to protect and leverage these assets and identifying who these assets are likely to be of most value to.