19 January 2021

Why a strong brand is crucial if you’re thinking of selling your business

The joys about working in the public relations industry are that we often get involved with interesting projects and people. One of the projects we enjoy most is when a client is looking to sell their business.

It’s a bit like turkeys voting for Christmas. Once we know the client has reached an agreement to sell their business, we’ll undoubtedly lose them. However, we love these projects.

The work we do helps our clients increase the value of their business. A business with a strong brand, an excellent reputation and a high media profile will undoubtedly attract more buyers than a company that, while it is very good at what it does, has a low brand profile.  

Like most things, there is a flip side to this. There are very savvy investors looking for a great business with relatively low brand profile. They acquire it and then start building the brand to achieve a higher valuation when they come to sell. And nine times out of ten, they’ll succeed. The simplest way to put it, is polishing the business and making it shiny for sale.

Strong brands always have perceived value. Think of mega-brands such as Virgin, Nike, Rolls Royce or Tesla. These businesses are worth a lot of money not just because of their products but the brand and how it has been executed. However, many organisations are now realising it’s not just the preserve of those companies to have valuable brands. Smaller businesses are just as reliant on their brand, in fact, more so as they’ll want to attract new customers.

Investing in the brand from the outset is vital if you want to grow a sustainable and attractive business. If your business has a strong brand its more likely to help increase the price paid for a business.

We aren’t saying that having a decent brand is going to be the answer to generating an excellent company valuation; a strong brand comes into being if it has a brand purpose which feeds the culture of the business and is focussed on delivering a great product or service. It’s why major companies spend millions on developing their brands and building positive brand experiences.

When selling a business, there’ll always be several factors to take into consideration that will influence the value. Generally, a company is worth anywhere between one to potentially five times net profit. Fundamentally, it’s only worth what someone is willing to pay for it.

There are various of schools of thoughts on how to value a business, but it can be argued that a recognisable and valued brand will help to drive a value up. Why? Because it shows investors that they’ll be taking over a business already primed for success.

So, if you’re a business owner that’s thinking about building your brand, drop us a line to see if we can help you achieve an increase in your company’s brand value.  

For informal chat, email Michael Gregory.

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