Valuations and other ways to sell your company short...

At a recent breakfast forum I attended, the central topic was private equity valuation, investment and growth in 2011. The panel was staffed with financiers, the audience mostly bankers and lawyers. Discussions encompassed all the ways valuations are conducted, factoring in such things as customer concentrations and bookings.

During the closing Q&A, I asked the panel whether any of their due diligence measures included marketing excellence. One of the panelists began to suggest how this might occur, citing how research of a prospective investment's customers once revealed no expectations for increased volumes, refuting the candidate company's contention of 40% growth in the coming year; when, as though to hastily recover this moment of lost sanity, another panelist quickly interjected that the only necessary measure of any business was in the financials. Marketing excellence, whatever that meant, was almost never a consideration.

And there it was. The private equity valuation blind spot seemingly shared by so many advisors whose profession is to evaluate the growth potential of a company: growth potential, as in the difference between internal value definition and external value recognition, the difference between a company that is aligned on mission, message and value delivery, versus an organization that is leaderless and going through the motions; i.e. valuations based on an understanding of the gaps that can exist between brand identity and brand image, management and leadership, momentum and entropy.

Valuation experts who insist on P&L-only measures to assess the investment worthiness of an enterprise keep missing the point. Success cannot be solely determined by customer concentrations and bookings.

And owners who think this way are also selling their companies short.

jb

www.centrifuge-now.com

The reality of diversity in business and in life...

In 2008, minorities were about one-third of the U.S. population. By 2042, they will be the majority. The business world will be the first to understand the opportunity here, as informed business leaders and their HR departments build their own internal diversities to come into alignment with their sales and market share ambitions.

Meanwhile, as demographics in America and the world change, so must America's high schools and colleges, if they are to remain relevant; not because diversity is the ethical or legislated way forward, but because diversity makes better business sense: Between 1990 and 2007, minority group market share and purchasing power doubled and in some sectors tripled. By 2012, minority purchasing power is predicted to increase by another 30%.

Soon, marketing realities will force the leaving-behind of negative connotations associated with the word "diversity." Which is to say, for some, diversity means uncertainty and discomfort over progressive changes in our schools and places of work, and for now this viewpoint can only see color; while for the rest of us, diversity will mean that we have seen the light.

jb
www.centrifuge-now.com

You don't need to polish an apple before you eat it...

Yet you probably do. And you've probably seen others do it. People will buff up an apple, rub it on a shirtsleeve before taking that first bite. It's an impulse seemingly programmed into us, a ritualistic final act of quality inspection, preparation and delivery.

It doesn't make the apple much more sanitary.

No, but what it does do is reassure you that you've got a quality apple in your hand – as you polish the apple you confirm there are no bruises, no ugly blemishes, no worm holes. And what it does inside your brain, when you see the apple's shine, is trigger a feeling of assurance and readiness, if not eagerness to buy – or bite – into that apple.

Buy or bite, these are actions that have very similar meanings. Before customers will buy your product or service, they will judge your offer based on the quality of your communications, your ability to put a shine on what you promise them. Whether it's an apple, a brochure, a web site, or your company's brand identity, customer's have a very deep need to feel you are a professional.

All successful sales people are professional communicators. Their communication materials come across as equally professional. Crafting a professional image is hard to do, when your company's marketing communications are blemished, when value articulation is weak, design is faulty and execution is spotty.

Such miscommunication taints the professional image of everyone in the company; not to mention, it diminishes your prospective customer's appetite.

jb