From time to time I get involved in discussions on the subject of Mergers and Acquisitions. In this uncertain economy we live in today many business owners are looking to merge, sell or in a few cases, purchase a business.
In my discussions with business owners looking to sell or merge I am finding it very strange how the buyers do not consider marketing plans and strategies as an asset of a company. They see it as a huge expense that adds no value to a business’ worth.
Operationally, I would have a hard time recommending to anyone to purchasing a business if it did not have a current marketing strategy. More specifically, if a business has not made the initial investment in developing a video-centric marketing strategy I would recommend they do so since some buyers may walk away if they had to immediately invest in advanced marketing to ensure the success if the newly acquired business.
So why are businesses who are looking to be acquired not making the investment in a marketing plan?
The number one reason I am given from business owners who are placing their business up for sale is they would rather keep those funds in the bank. They feel showing a cash reserve would make the business more valuable.
A business appearing to have substantial cash in reserve will catch the eye of many CFO’s who will be asked for their feedback on if that business would be a good purchase. However, on the other side of the table where the COO sits there might be a counter to that recommendation.
How valuable is a business that does not plan for the future or invest in its profitability? From my experience, a company that showcases their marketing plan as what drives the value of their business would be a business I would purchase over a business that leaves the investment of developing a marketing plan to a new owner.
Granted, for a cash strapped business looking to sell out, not investing in the future could make sense in that case. However, not considering a marketing plan as an asset of the business is going to result in a huge discount on the offering price for that business over a business who has treated their marketing as an asset.
I would like to see the thinking of what is an asset and what is not changed to making a strong video-centric digital marketing strategy a huge asset of a business.
Let me know what you thin and then let me know how I can help.
