Selling a business: how to calculate the value of customers.
We continue from the first part, where we considered the elements that influence the value of a ‘customer base’ held by a company.
We have seen that it is not easy to determine the real value of a customer portfolio held by a business firm or professional study.
They are in fact many variables that influence the customer value of an asset.
Some of these variables are more easily identifiable while others require a more thorough and careful analysis.
How much is a customer package: the overvaluation risk.
Even if you are evaluating the value of customers in a professional study or a in company that has a customer base verifiable, often, you may run into misjudgments when:
there are ‘old customers’ who are no longer strategic for the enterprise;
there are customers are receiving a too much favorable treatment and from the old owner and so, it is absolutely not profitable for the company and consequently, the margins offered by this group of customers are very low;
the customers are not loyal and so, soon, they could leave the company for other competitors;
in the event that the client base and has long been progressively declining and in the future, is expected that will continue the reducing of their number;
customers are mainly related to the person of the old employer and therefore, not loyal to the activity itself, with the risk that they may go away when the old management will over;
they are customers ‘temporary’, that is, they will will remain linked to the firm for a limited time until they reach certain goals and tasks, then, they will leave today’s supplier;
within the group, there are customers that for the type of processing and manufacturing sector, are in great difficulty and is expected in the future, a decline of ‘performance’ by these entrepreneurs;
they are customers ‘ripe’ that they will not grow in terms of turnover in the future. In practice, they are not able to develop new projects and orders from the current level.
Faced with these objections and potential problems, it is essential to handle a possible transition of management that is able to ensure also that the simultaneous transfer of the customer base in its entirety without loss.
The presence and support of the old entrepreneur who sells the customer base, it becomes crucial to monitor this delicate phase of transition.
In the third part, we will hear the testimony from a couple of entrepreneurs who bought the assets and of course, its client base.
From the evaluations of the protagonists themselves, we can compare two different versions and evaluations that are useful to successfully deal with this issue.
Continue.
