7.PROCUCT/SALES PIPELINE – Smaller companies often are more agile and have better R&D efficiency than their high overhead big brothers. In technology, time to market is critical and big companies evaluate build versus buy question. Small companies that develop new technology are faced with decision of developing distribution internally or selling to a larger company with developed channels. A win/win scenario is to sell out at a price, in cash and stock at closing, that rewards smaller company for what they have today, plus an earn out component tied to product revenues with new company.

8.PRODUCT DIVERSITY – A smaller company that has a quality portfolio of products but may lack distribution can become a valuable asset in hands of strategic buyer. A narrow product set, however, increases risk and drives down value.

9.INDUSTRY EXPERTISE AND EXPOSURE – Encourage your staff to publish articles and to speak at industry events. Encourage local and industry reporters to use you as voice of authority for industry issues. Your company is viewed in a more positive light, gets more business referrals, and an industry buyer will remember you favorably as an acquisition candidate.

10.WRITTEN GROWTH PLAN –Capture opportunities available to your company in a two to five page written growth plan. What additional markets could we pursue? What additional products could we deliver to our same customers? What segments of our current market offer most growth potential? Where are best margins in our customer base and product set? Can we expand in those areas? Can we repurpose our products for different markets? Can we license our intellectual property? What about strategic alliances or cross marketing agreements? Documenting these opportunities can add to purchase price.

When it comes to unlocking market value of your privately held company, it is not limited to bottom line. Profitability is hugely important, but factors above can result in significant premiums over traditional valuation approaches. When you sell Microsoft stock, there is no room for interpretation about market price. The market for privately held businesses is imprecise and illiquid. There is plenty of room for interpretation and result for best interpretation by marketplace is a big pay off when you decide to sell.