Is There a Rembrandt in Your Attic?

As entrepreneurs, we should have our exit in mind when we start our companies, but we usually don’t.?Regardless, for every business owner, there will come a time to think about and execute an exit strategy, which might be selling your business to your family, partners, or another third party. When the time comes, will you just accept the buyer’s offer? Or will you be able to get a higher valuation for your business because you have a Rembrandt in your attic?

Not sure what I mean by a Rembrandt in the attic??Let me explain.

There is a house for sale with a listing price of $1M.?

Buyer #1 does a quick tour of the house. He likes the house’s layout, the yard, the little stream in the back, and more. Therefore, he offers to buy the house for the listing price.?

Buyer #2 does the same as Buyer #1 but sees the basement as the perfect location to build a great home office. Therefore, she offers $1.1M, which is more than the asking price.?

Now, Buyer #3 does a detailed tour of the house and loves the stream, basement, and living room.?As part of his detailed tour, he goes up to the attic and looks behind an old column where there is an actual, original Rembrandt painting. Being a bit of an art collector, Buyer #3 knows this painting is worth $25M. So, he offers $1.5M for the house.?

Of course, the seller takes the highest bid from Buyer #3. Buyer #3 gets assets worth more than $26M for $1.5 Million and the seller loses out on a big payday because they were unaware of the Rembrandt in their attic.

The moral of the story for the business owner – buyers are looking for that Rembrandt in the attic. Therefore, as a seller, you should know what your Rembrandt is and what it is worth. Basically, your Rembrandt is what you are best in the world at or that hidden gem, maybe it’s a special process or Intellectual Property that will bring you a bigger multiple when you exit.?

I can personally attest to Rembrandt in the attic concept. Before becoming a Certified Scaling Up Coach, I ran my own companies for 34 years.?In 2016, I merged my IT company with my Cloud company in order to scale and grow. About a year later, I exited. What I did not know at the time was that my Rembrandt was a long-term, monthly recurring client base of over 30 years. Because I had a predictable consistent cash flow, my company was worth more than the multiple that I received.

Lessons like this are among the main reasons I decided to become a Scaling Up coach. Today, I help business owners create, identify, and maximize their Rembrandts. Want to learn more, just?reach out to me .