Posts Tagged ‘ Qualitative Risk ’

Ever been blindsided by a Yelp “review?”

Here’s something buyers, sellers, and brokers should be considering. In addition to the flow of all the financial statements and all the necessary due diligence that takes place in business sales, something else is happening. While grizzled old timers (many of whom are younger than me) may pound on the table and claim “facts are facts,” increasingly, one’s reputation is a factor in selling and buying.

If you’re a seller, are there Yelp comments on what you offer as a service or a product? Are there angry blog entries by people who’ve had an unfortunate experience with your company? And- what are the online bread-crumbs your senior management are leaving behind? What are *their* skeletons? While you may not be able to scour the web and eliminate all the goop, you can, and should, be aware of what’s out there. If for no other reason than to prepare for the inevitable question of why you’re a regular attendee at a boondoggle conference every year, in Hawai’i, in February, or why your spouse belongs to a country club that’s repeatedly faced charges of discrimination … All this information is out there.

And there’s more. As a potential seller, what odd things will a Google search find about the person who’s possibly going to make an offer to buy your company?

The point is, what was due diligence 10 years ago isn’t the best you can – or should – get nowadays.

In a recent SmallBizTrends.com article, “Avoid that online reputation management nightmare” (by Lisa Barone) -there’s more meat to this idea:

http://smallbiztrends.com/2009/07/reputation-nightmare.html

so, how much is your business worth these days?

There are lots of ways to do valuation – from the rigourous  bring-in-the-accountants approach to the back-of-the-envelope scribbling based on revenue and a bit of Kentucky Windage.  And, predictably enough, a whole lot of free (or inexpensive) software tools to walk you through a process.

In this last group is the (free) valuation service provided by BizTrader. ( http://www.biztrader.com/valuations/financial )  

4 clumps of data need to be entered:  contact info, P&L (revenue net income, owner’s compensation), Balance Sheets (assets, liabilities) and Qualitative Risk Assessment.  15 or 20 minutes work and you get back a report that gives you, at the very least, a solid estimate.  For less than a half hour of work, a pretty good deal!