The vast majority of U.S. companies are privately owned. And when owners decide to sell, they often find that their company doesn’t elicit bids as high as what they want to sell it for. One SMB M&A specialist recently told me that half or more of her clients overestimate the sale value of their company. What’s an owner to do?
Most companies don’t market well, if at all, but by doing so they could significantly increase their revenues, profits – and sale price.
Buyers of companies don’t pay based on some magic formula; a company is worth what someone is willing to pay for it. Bending the company’s profit curve would likely lead to a higher sale price because the seller would have a better story to tell to buyers: “Don’t just look at past results, look at what you could do if you continued the new marketing programs that we foolishly only started in the last year or two.”
And in this case the ROI on the marketing for the seller would be much, much higher than usual, because they would not only get the new, marketing-driven profits before the sale but they would also get the millions added to the sale price.