Imagine you’re selling a car. You’ve got the service records, to show it’s well looked after. You’ve given it a good clean, to maximise that visual appeal. You’ve done everything you can to make sure you get the best price possible – and it worked, you got a good deal! The new owner drives off down the street – and then you remember you left a wad of emergency cash in the glove compartment. Whoops. You forgot a hidden asset.
Selling a business can be a little like this. In many cases, businesses are chock-full of hidden assets, and sellers miss an opportunity to crank up the sale price by not leveraging them in the sale! Thankfully, Daltons is here to help you identify and unlock your hidden assets. First off, what could they be – and how do you identify them?
Uncovering Hidden Assets
Hidden assets are any assets owned by your company, that aren’t recorded on your balance sheet. First thing is to check the basics – you’d be surprised how many businesses increase their value by remembering an old plot of land they own but haven’t been using, or even an old bank account that’s been forgotten about and has been quietly accruing interest. This here is the financial equivalent of finding twenty pounds in an old coat pocket, and its worth a rummage through your business history to check! Ask yourself, what else do you own? Think through the tangible assets within the portfolio – even old equipment can be resold or leased to generate value.
Once you’ve worked through the tangible, physical assets of your company – it’s time to think about the intangible. Do you own any trademarks, patents or copyrights – intellectual property that gives your business a leg up? And it doesn’t just have to be traditional assets. Recall our definition – just because these items aren’t on the balance sheet, that doesn’t mean they have to be assets that COULD be recorded on a balance sheet.
Anything that ups the value of your business can be a hidden asset. Trade secrets. Well-developed policies, procedures and processes. Excellent reviews, awards you’ve won. Great SEO on your website, or significant newsletter membership. Impressive employee retention rates. If it makes the company looks good – it’s a hidden asset. So work your way through the business from top to bottom. Get the input of those around you – they may see success in parts of the business that you haven’t.
Levering Hidden Assets
So you’ve found your hidden assets – now how do you use them? Well, if you’ve been lucky enough to uncover something tangible like property, equipment or cold hard cash – get it onto your balance sheet! This is the simplest way to demonstrate the added value of hidden assets to prospective buyers. Of course, that might mean a bit of worthwhile extra work – say, getting a property valuation, or organising the sale of some old equipment.
In the case of those really intangible hidden assets, unlocking their value may be more complicated. The general objective is to shine some light on them. Highlight them on your website, in how you market and promote your business. Incorporate them into your business advert, especially if you think they add to the USP. Data is often a hugely overlooked hidden asset – you may be collecting customer data that could create significant value through better targeted marketing or engagement.
The other aspect is to think strategically and longer term – could you leverage any hidden assets to enhance your value in other ways? Renovating and repurposing an unused building could create a new source of income. Developing some of your successful procedures into a training programme for other companies could add another feather to your cap. You may have to spend money to make money, but that’s a cliche for a reason.
Keep it on the Up and Up
It’s a common misconception that hidden assets are shady, and indicate dodgy practices or even illegal activity. This isn’t the case – businesses of all shapes and sizes find hidden assets every year. Nor is keeping hidden assets confidential illegal – although this is where you need to be careful. Hiding assets to inflate your company valuation or avoid taxes could land you in very hot water indeed!
It’s vital that you take professional financial advice in how you deal with hidden assets. Accountancy professionals are trained to help with this, including the identification of hidden assets.
So hopefully this has started you thinking about your business, and what financial goldmines may be stuck between the sofa cushions of your company! Who knows, you may be the next Tiffanys – a legend in the world of hidden assets. They were operating from their flagship store in Manhattan for thirty years before someone took a step back, and realised their high street property was worth more than the company itself. Three years later, their stock value was up by 450%.
So take that step back, and who knows what hidden assets you’ll see.
If you are ready to sell your business, then look no further than Daltons, with community of over 194,000 registered business buyers, we help get your business in front of a highly engaged audience looking for a business like yours! Click here to find out how you can gain access to this resource!
