What are the key characteristics in a valuable business???
By far, this is probably the most talked about topic that we discuss on a daily, weekly, yearly basis. As we are trying to build value, it is so important to clearly understand what is value…
In reading an article recently published by the Jordan Edmiston Group (www.jegi.com) I came across what is probably the most clearly delineated listing of what buyers would be looking for.The quote is from Philip Siegel, General Partner from Austin Ventures in discussion interactive and marketing acquisitions. He stated, “we’re looking for a company that combines two or three key aspects: a focus on proprietary information; a software application that the user embeds into their business process; and recurring revenue”.(Source – JEGI Client Briefing – January 2009) For a while I have been preaching the theme of “Locked-in / Recurring Revenues” as the model most appealing as value to customers. This is a combination of business model, technologies, business processes associated with these technologies, and a clear vision for growth.
Philip’s delineation, I believe, is a further and clearer and better definition then mine on the same theme. It clearly rules out many business models and avenues that people would go down to chase business and build out a company. However, as a roadmap and key guiding principles – it is very clear and should hang on the wall of every tech CEO and anyone looking to grow a value business.
Again – here they are -
1) A focus on proprietary information
2)A software application that the user embeds into their business process
3) Recurring revenue
Obvious – probably. Simple to understand – definitely. Easy to make happen – not so much. Worthwhile as a guiding light – DEFINITELY.