Tuesday, December 10, 2013

How to Value Software

Having working software in hand will ensure a significant time premium when it comes to developing time-critical apps.
Valuing Intellectual Property, which is intangible in many ways, is becoming a relevant area of study in the domain of initial public offerings (IPOs) or mergers and acquisitions (M&A). Valuation of Intellectual Property is similar to valuation of real (tangible) properties in that the outcome of both exercises is to establish the current worth of the asset. However, it is different from the valuation of real property in that it is a type of commodity whose value is derived from the information it contains or represents. Information goods are, by nature, non-excludable (in that people who have not paid for the goods can still use it) and non-rival (in that the commodity can be used by more than one person at the same time). Intellectual property assets are further different in that they are essentially either commercial or product-based assets. Under commercial assets are included IPRs including trademarks, trade names, brands, GIs and character names. Within product-based assets are included patents, copyright, design, etc. The most important difference of an Intellectual Property asset compared to a real property is that its life is governed by statute (patent rights only last 20 years and so on) and is regulated heavily by market demand.
Value is not a specific figure but rather an alignment of assumptions. Typically, we use three components for valuation – cost-based, market-based and revenue-based – also thought of as value past, present and future. Timing and context are critical components of the assessment. For example, the complexity and customization needed to create an asset may cause a high level of cost variability and outcome uncertainty. Similarly, given sufficient time, multiple alternatives can be explored, but if deadlines are tight, the need to have a working solution requires a value premium. We will look at each of these elements to provide a reasonable approximation of the value boundaries.

Intellectual capital can incorporate both intellectual properties, such as patents, trademarks and licensing, as well as human capital such as employees. For acquisition purposes, the degree to which intellectual assets are formalized or codified increases the likelihood of retaining the value. If the employee experiences or methods are documented, those assets are more readily leveraged and potentially non-linear (highly scaleable). If those experiences or methods are known only to the employees, leverage or reuse will be more restrictive and will require additional employment agreements to capture those assets. Note that this estimate range cannot include the potential options value for market timing, for example, if the underlying asset (let'€™s say software) is necessary to win a contract or deliver to a deadline within a 3-6 month time-frame. In such a situation, the time premium can easily double the estimated value, depending on the opportunity.

Cost-based valuation can take into consideration the contracts that the seller has in place with the rest of his clients, to estimate an upper bound on the development costs, based on budgets for management'€™s involvement in contractor's time (and that would assume the project/product represented the majority portion of the firm'€™s time and effort during the year).

Market-based value focuses on alternative offerings that can provide the same functionality in the same or necessary timeframe. If the underlying functionality of what is being acquired is custom configured to the buyer’s offering, it is then outside the scope to find comparable acquisitions.

The only reasonable alternatives will be to consider redeveloping the code adaptations provided by the seller or to consider simply purchasing the rights to those licensing restrictions. But the difficulty here is timing. Given sufficient systems evaluation, it is likely that the seller€™s adaptations to the buyer€™s code can be recreated, but it is worth examining whether it can be done within a short enough timeframe and with the necessary reliability to meet the seller€™s strategic needs.

A second alternative will be to purchase only the rights to the specific portfolio that the buyer is interested in. The first step in this case will be to estimate a baseline bid plus a necessary premium for the time value of strategic enablement. We estimate that such a premium is dependent on negotiations, which are influenced by both available alternatives, as well as income opportunity differentials (that is, the positive income associated with immediate sales versus the potential time delays for alternatives). Clearly, the availability of alternative development resources for a given timeframe can provide greater leverage in negotiations. However, as we noted up front, even with significant resources, it is often difficult to scale development in a linear fashion. Without enough time or adequate alternatives, the premium can be outside normal valuation bounds.

Revenue-based valuation is the third component, which alludes to what future value and asset can create. As mentioned in the introduction, there is a contingency or options value based on the ability to enter markets immediately with a working solution. The option can be parameterised by estimating the value of the contract, the decision timeframe, the portion of the offering dependent on the underlying software and approximating the estimate of success variability for the contract. In addition, although future revenue can be ascribed to a particular product, from a practical standpoint, the time horizon is necessarily limited because the product itself can undergo modification and within the same time horizon, other alternatives can be developed or acquired (think of these as an augmented discount rate). For example, if the buyer’s launch was delayed by a year (to acquire alternatives), assuming no other changes (unrealistic), the upper-bound difference (cost) will vary. Of course, the strategic impact of such a delay can be severe, especially if pursuing a first-mover advantage. So, the actual value to prevent the delay can be much higher. Obviously, not all revenue in a service offering is attributable to a single software component. So one can more accurately adjust the revenue estimation based on a percentage component, and with necessary adjustments for other costs.
Software can present a particular timing estimation problem. Although software development methodologies can improve delivery consistencies, the rapid change of technology frequently creates faster and more efficient implementation tools, compared to the original development. Moreover, having an existing solution provides a working template for implementation, which can also accelerate the ability to provide an alternative. On the downside, however, most software development has limited scalability. Even with an extensive budget, doubling the number of developers will rarely reduce the development time significantly. A properly scoped original project is unlikely to be done significantly faster, even if more resources are made available. Therefore, for a time-critical application, having working software in hand, can command a significant time premium to the value, as has been discussed above


Thursday, November 7, 2013

FAQs about valuations of ESOPs

Some FAQ's for Employee Stock Option Plans (ESOP)
...Why do we need to engage an outside party to value our ESOP shares?
From a strictly regulatory standpoint, a valuation of ESOP shares by an independent third party is required by the Department of Labor (DOL) and the Internal Revenue Service (IRS).  The regulatory requirement stems from the practical need to insure that the value is determined by a party who does not have a personal or financial interest in the valuation result.  The valuation, moreover, should be performed on behalf of the ESOP trustee since it is the duty of the trustee to insure that transactions with the ESOP are consummated at “fair market value.”

What is meant by “fair market value”?
Fair Market Value (FMV) is a concept and not a price that emerges from application of some standard formula.  In simple terms, FMV is the price for which property would sell under the existing market conditions for such property as established in arms-length negotiations between knowledgeable and independent parties.  The “market” implied in definitions of FMV encompasses all potential buyers and sellers of the property involved. 

How is “fair market value” determined?
There are many method used in the determination of FMV.  The nature of the property being evaluated determines what methods are appropriate.  For example, the FMV of a single family home is determined by the price for which similar property is selling in the area in which such property is located.  The FMV of business interests that is generating earnings, however, is determined to a large degree on the basis of what a knowledgeable buyer would be willing to pay for the earnings stream considering available rates of return on relatively risk-free investments and the risks associated with the investment being appraised.  Although not the only method that might be considered, the present value of future earnings using a risk adjusted market rate is one of the most common approaches, referred to in business valuations as Discounted Future Earnings (DFE).

Reference to the results of mathematical formulas is not the sole determinant of FMV.  The judgment and experience of the valuation analyst is also a critical element since there can be many factors that can not be quantified by reference to the underlying financial information alone.

What is meant by a “control premium”?
A control premium is that amount which a buyer may be willing to pay to acquire a controlling interest in a business over and above the value of the interest based solely on the underlying financial factors.  The element of control, in this case, has a value which is added to the value that can otherwise be ascribed to the assets and earnings of the business.  The payment of a control premium in the purchase of a business does not necessarily add any value to the business.  Synergy value, unlike control, is susceptible to being measured in more concrete terms of increased financial benefits to the buyer over and above those being enjoyed by the selling parties.  Examples are the prospects of increased sales of the buyer’s products to the seller’s customer base or lower overall materials costs due to volume purchase discounts, etc.  Whether or not a control premium is appropriate in the purchase of shares by an ESOP must be determined on the facts in the individual case.  Moreover, since the ESOP generally doesn’t control a company itself, there is much debate as to whether or not an ESOP can pay a control premium for shares purchased, even if purchasing a controlling percentage.

How do ESOP valuations differ from valuations for other purposes?
Because of the regulatory requirement established in the Employee Retirement & Income Security Act of 1974 (ERISA) that an ESOP pay no more than “adequate consideration” in the purchase of employer securities, ESOP valuations must support the decisions of the trustees and must also withstand review by DOL and the IRS.  Valuations that are subject to being reviewed by third parties, whether for ESOP or other purposes, must include considerable discussions on the methods and factors employed as well as explanatory information on the sponsoring company’s financial and operating history and the industry in which it competes.  For similar reasons, valuations supporting tax related values for gift and estate or charitable deduction purposes must also include considerable background detail so that potential third party reviewers will have a clear understanding of the process leading up to the value conclusion.  In addition, ESOP regulations place various obligations on the sponsoring employer and allow for limitation of the voting rights of ESOP shares.  These, and other features specific to the ESOP require special consideration in the determination of the fair market value of ESOP owned securities of privately held companies...

Source is this firm GROCO CPA 

Wednesday, October 9, 2013

Learning from a bad loss

Interesting piece in Business Insider about how to make lemon from lemonade...or said differently how to maximize your learning from the excruciating pain of business failure...the article is written by serial entrepreneur Steve Blank

We give abundant advice to founders about how to make startups succeed, yet we offer few models about dealing with failure....

In my experience, living through failure has 6 stages:


Stage 1: Shock and Surprise

We raised $35 million and after 18 months made the cover of Wired magazine. The press called Rocket Science one of the hottest companies in Silicon Valley and predicted that our games would be great because the storyboards and trailers were spectacular. 90 days later, I found out our games are terrible, no one is buying them, our best engineers started leaving, and with 120 people and a huge burn rate, we’re running out of money and about to crash. This can’t be happening tome.

Stage 2: Deny any of it was your fault

In my mind, I had done everything the investors asked me to do. I raised a ton of money and got a ton of press. We hired everyone according to our plan. It was everyone else who screwed up. I did everything right.

Stage 3: Get angry and blame everyone else

This was the fault of my cofounder since he was in charge of game development, it was the engineers who bailed on me, it was the sales and marketing people who didn’t tell me how bad the games were, it was the VC’s who refused to put any more money in the company, it was Sega’s fault for making a bad gaming platform…

State 4: Get depressed

When the inevitability and magnitude of the failure sunk in, I slept in a lot. There were days I’d get up late and go to bed again at 5 pm. I lost interest in anything associated with my past industry. (To this day I still can’t play a video game.)

Step 5: Gradually accept your role in the failure

A few weeks after leaving, I began to think about what I should have done, could have done and pondered why I didn’t do it. (I didn’t listen, I didn’t act, I didn’t own my role as CEO, I wasn’t prepared to do what was right or leave.) This was hard and didn’t happen overnight. My wife was a great partner here. I often reverted to Stages 2 and 3, but over time I took ownership of my primary role in the debacle.

Stage 6: Gain insight and change your behavior

This was the hardest part. While I stopped blaming others, understanding what I couldchange in my behavior took long months. It would have been much easier to just move on, but I was looking for the lessons that would make my next startup successful. I looked at the patterns of behavior, not just at my last company but also across my entire career. I learned how to dial back the hubris, get other smart people to work withme – rather than just for me, listen better, and act and do what was right – regardless of what others thought I should do....

Now when I listen to entrepreneurs who’ve cratered a company, I listen for their stories of failure and redemption...

Read more: http://steveblank.com/2013/02/26/failure-and-redemption/#ixzz2OiAbmUx9

Thursday, September 12, 2013

Five questions investors ask before backing a start-up

Sometimes it takes a neighbor from north of the border to lay out in the most plain-speaking of manner the issues that are always on the mind of most early-stage US investors, and yet often go unstated in the early stages of the relationship. This article is written by VC Cameran Chell and is published in today's Globe and Mail
1. Where’s the money coming from?
Call me old-fashioned but as an investor, I’m there to make a profit. For me, the two clearest ways of seeing this potential are through understanding the startup’s revenue model and the possible exit scenarios.
If these two things are not clear after the first meeting with a startup, either they’ve not been prioritized or in the worst cases, they’ve not been considered at all. An active customer base that is consistently validating product growth, and paying for the product, is, for me, always a key factor in deciding whether to invest. This is followed closely by understanding any potential exit possibilities.
2. Who else is investing?
This effectively boils down to the believability of the story the startup is telling. If other industry leaders are in the investment, what did they find appealing? If they’re out, what turned them away?
While most investors will like to feel they’re able to spot a winner all by themselves, few would disregard completely the opinions of successful contemporaries.
3. Who are the local investors?
Startup communities tend to be centralized around a handful of major cities. In Canada, these are typically Vancouver, Calgary, Toronto, and Montreal. Although investor communities will certainly also co-exist in these areas, the age of geographical restriction is all but dead.
Investors travel and will almost certainly invest away from home if an opportunity presents itself. As much as startup communities are tightknit, investors are even more so. Ego plays a huge role in validating an investment, and as an outside investor, the social proof that is attached to the local investment community has huge sway in validating whether or not an investment is worthwhile. These are the investors that are most intimate with the startup, if they are in, it lets outside investors breath a little easier.
4. How do we monitor development and growth?
While public companies are subject to mandatory reporting procedures laid down by regulating bodies, for startups with private investors, there aren’t established processes for receiving updates and communications. For this reason, some investors take on board positions and get their development updates this way.
However, not every investor can be a board member and therefore a reporting system must be put in place which accomplishes two things; (1) Isn’t overly invasive. The last thing an investor wants to do is hive off time from development and growth, especially to get updates on development and growth! (2) Is accessible to an investor in their own time. Scheduling update calls, either as a group or individually, can be time consuming and distracting. When investors have the option to receive updates on their own time, the onus for communication can fall on them.
5. Can’t we all just get along?
At the time of writing this, the majority of businesses are still run by humans and for an investor, the ability to work harmoniously and constructively with a startup founder and their team is essential.
Startups are a difficult road to travel and, in what can be an exceptionally volatile and stressful arena; egos and expectations need to be checked regularly. When looking at any new opportunity, if I can’t see being able to weather these storms, which will inevitably arise along the way, with the team in place, I will always choose to walk away.

Thursday, August 15, 2013

Recruiting...the case against hiring your clone.

Some excellent advice from Joel Peterson the Chairman of Jet Blue Airways. This advice it particularly true when you're in a start-up mode, when hiring yourself can result in an echo validation chamber that results in failure to see the fatal flaws in your idea. The main exception to the general rule is that, in my experience, once the organization has achieved traction and you're starting to think about succession planning, hiring your clone may be a good thing to ensure organizational values are maintained after you exit...

..."Don’t fall into the trap of selecting candidates who look and act like you do. Many new CEOs I know are too easily impressed by candidates who went to the same business school as they did, or worked at a company they worked at, or grew up in the same part of the U.S.

There's plenty of research to show that we evaluate people more positively when we feel they're more like us. Similarities in experience, attitude, political views, and physical appearance all increase the likelihood that people will “connect” -- even if those similarities are hiding weaknesses that make the person ill-suited for the job.

From the factory floor to the executive suite, no manager is immune from feeling comfortable with the familiar. For one thing, we tend to like people who affirm our opinions and decisions. And we tend to be able to communicate more easily with people who share our background, language, and belief system. Better communication means fewer conflicts, and if we feel like we're going to get along with one hire better than the other, that's a hard impulse to ignore.

But ignore it you should. At the worst, an unchecked tendency to hire people just like you can be discriminatory; if it means you're excluding people because they're different, that can spell legal trouble.

More important, building a homogeneous organization is just bad business. You won't have the variety of perspectives, backgrounds, and skills that are invaluable when you're up against big problems, or facing big opportunities.

You want to work with a group of people who challenge each others' perspectives, and push each other beyond perceived limitations. The value of a great hire becomes clear when people on your team are forced out of their comfort zone by an infusion of new ideas. That's when the world begins to look a little different."..

Tuesday, July 23, 2013

Beyond Google ...taking market research to the next level

    • You would think with the abundance of information available online that today's entrepreneurs would be well-positioned to back-up their business plans with solid market data. You would be wrong. Many business plans are supported by nothing more than the results obtained from page 1 of a Google search.
  • How to do a better job? Expand your search engine horizons and pick and choose from this extensive list of resources accumulated by Steven Clough at Williams Helde

      • ...Hit the web: Doing a web search for something your audience might be researching is a great start (i.e., if you’re developing a new baby learning app, a search for “ipad apps for babies”). Not only does it give you a moment to see the world through the eyes of your audience, but it’s also a great way to get useful ideas and learn about competitors. Can come up with any search ideas?Wordtracker provides a tool that shows you search questions based on keyword inputs. And if you don’t have time to sift through multiple sites, try the Ultimate Research Assistant, which performs a search for you and summarizes the findings into an executive summary.
    • The original online social media: When we think of social media today, we think of Facebook and Twitter, but long before social networks, web forums were the go-to source for information from peers. Today, especially within niche groups, web forums hold a wealth of information and candid conversations. You can find a bunch of forums via a simple web search, or search a site like Forum Finder or Board Reader  (if you search for “forum directories”, etc., there are a bunch of similar sites). Sites like Google Groups and Yahoo! Answers can provide a great deal of information about customer questions and concerns, as well as comments and reviews on sites like Amazon. Forums are a great place to put yourself into the middle of your consumers’ conversations.
    • And the new social: Bing Social is a great tool for social media searching (or the similar 48ers). Others includeKurrentlyBooshakaTrackurWhos Talkin, and Social MentionAddictomatic is a great visual aggregator. Some paid tools, like SproutSocial, have limited time free trials that can help you get what you need.
    • Dig up research online: Think With Google is one of my favorite little secrets (not to be confused with Google Think, which is also pretty great). It’s has a huge amount of research, statistics, case studies, and marketing tools. Not sure why it’s not more popular, but it’s an amazing tool. Google ScholarMarket Research and the Kauffman Foundation are other great tools, although a lot of the studies you’ll find are not free.
    • Find consumer psychology profiles: At marketing-schools.org has a great section on their website about consumer psychology. There are some useful examples and information about consumers within different business verticals – including travel, beer, computers, exercise, foods, soft drinks, and apparel. If nothing else, it’s a good example of one approach to how to start thinking about consumer psychology.
    • See what people are saying: Sites like TechnoratiGoogle Blog Search are not only great tools to find blogs and articles on topics, but also a great research tools to see what topics are trending.
    • Ask some questions: Tools like SurveyMonkeyKwikSurveys, QuestionPro, and Zoomerang are great resources that can be used for free or cheap to gather first party user information via surveys. If you want to go a step farther, check out AYTMGutCheckIt or uSamp, sites where you can quickly pull together panels of participants for surveys or even real time in depth interviews.
Beyond qualitative data, quantitative data can be incredibly important as well, particularly for validating qualitative research and selling ideas. They’re less subjective, more comparable, and easier to interpret in a snapshot than qualitative data.

    • Use online demographic data: Quantcast is one of my favorite tools for gathering site and user information. They have an awesome site analytics tool with some rich demographic data. This demographic data is very useful when you start looking at adjacent verticals or look at similar properties to get a better audience understanding (i.e., if you have a baby product, site demographics of parenting.com might be a good proxy for your audience. The one caveat to remember is that all website analytics have the confounding variable of being “website analytics.” If your audience is not heavy web users, your data might be skewed to the small segment of the population). You can also use Quantcast’s media planner tool to see what media properties your audience is visiting. This can be great for media planning, but also for competitive research and revealing other audience interests.
    • Company data: BizStatsHoovers, and Jigsaw all offer tools where you can collect data of different companies and industries. This is great for information to help with category validation, projections, and competitive research.
  • Use public data sources: The Bureau of Labor Statistics,PEW, and the U.S. Census all have a phenomenal amount of data on different industries and populations (even information like “how frequently do people work out” broken down by different demographic parameters). Tools like Free Lunch can be helpful in navigating this massive database (there are other free tools like this if you 
  • search for them).
  • Web resources: Need to find the population of Omaha, Nebraska? If you’re trying to find basic data about a product, person, place, region, event, and much more, WikipediaWolfram Alpha, andSitegeist are great resources that will provide quick, easy, and free answers to your questions.
  • See what’s trending: Google Trends is a great tool to get search and compare trends for different keywords. This can be a great resource for data validation, gaining insights into adjacent categories, and help substantiate a market.
  • Use other marketers: If you search for it, there’s an amazing amount of 3rd party research available. Organizations like the 4A’s, the DMA, the IMA, and the AMA, research firms like IpsosExperian/SimmonsScarborough,LRWemarketer, the Boston Consulting Group, the Hartman Group, and Forrester, agencies like Razorfish,Ogilvy, and of course, Williams Helde, vendors like Hubspot and WebTrends. The list goes on. Sites likeSlideShare host a ton of great content from agencies around the world. For reports that aren’t free, you can usually find good summaries of them online. And if you can’t get access to a particular report, not public libraries and universities have access to a large volume of journals and research databases
  • Reference infographics: Infographics are a useful and growing trend. A lot of agencies and organizations are footing the bill for research and providing free data to the world. Sites like Good.isMashable InfographicsInfographics Only, and Daily Infographic host a large database of infographics that contain a ton of rich data points. Furthermore, leveraging compiled data like this can save you time and energy from digging through different resources. Just make sure the sources are credible.
In-market research:
There are times when research precedes launch, but in the real world, where it’s nearly impossible to simply pull all your advertising until you finish a study, doing in-market research can be a phenomenal solution. Not only does this put your ad dollars to work while you’re gaining data, but it also gives you real world feedback instead of having to extrapolate a result from a small sample set. As in-market testing is a topic within itself, here are just some easy to use tools.
    • Watch your website: Google Analytics is a great tool for on-site tracking. See where people are coming to your site from, what they’re searching for to get there, how they’re moving through your website. See if there are any sticky points in the purchase flow. Also see what keywords your users are using to find you. This could help you determine what’s triggering purchases and help inform your campaign messaging.. It’s a brilliant and intuitive tool. If you aren’t a Google fan, try Bing Webmaster Tools or open-source PiwikQuantcast also provides some great on-site tracking features including site traffic and demographic profiles of your visitors. Clicktale allows you to see heat maps of where users are hovering while on your site.
    • See what drives customers: Hootsuitedlvr.itbitlyand linktally.com are great tools to help you track how many times your links have been clicked. Try using different links for different banner creative to see if one out performs the other. There’s a bunch of tools that will track clicks if you search for them.
    • Track your videos: Content remains king, and video is becoming the go-to content for web. Companies likeOneLoad (formerly TubeMogul) and SocialCam help you distribute and track your video content. See which content pieces are resonating best with your audience and use this information as a gauge for your messaging hierarchy.
    • Test messaging via email: Using tools like MailChimpConstantContact, or MyEmma, you can test different visuals, messaging concepts, and call to action through open and click tracking.

Thursday, June 13, 2013

104 social media tools to reach your market

This list of online marketing tools was first published in Everything PR. in January 2013.
An original list was prepared by  with several additions made by readers of Everything PR. 
  1. DivvyHQ is the Content Marketing Industry’s first spreadsheet-free editorial calendar application built specifically for professional content producers. Within one easy application,  you can manage your content ideas, editorial team, production process and deadlines. With DivvyHQ, it is possible to organize and successfully execute your demanding and complicated content marketing initiatives.
  2. Scribe delivers the exact content marketing process that helped Copyblogger evolve from a simple blog into a software company with 100,000+ customers – and it will work for your business, too. WordPress users are advised to check out Scribe for WordPress.
  3. Intigi helps marketers find, curate, and share engaging content so they can build their company’s thought leadership and increase qualified website traffic.
  4. The Content Marketing Institute: the clue is in the name. The site offers educational resources to help you navigate how to get started or improve your content marketing efforts.
  5. HubSpot Academy: superb resources, including ebooks, hot to articles, webinars, and much more. Check out the Marketing Grader to see how you’re doing with your marketing online.
  6. LinkedIn: LinkedIn Answers will be discontinued January 31, 2013 – a puzzling move, given the rise of Q&A communities. Nevertheless, LinkedIn continues to remain a good source for content ideas through other popular LinkedIn channels including LinkedIn Polls, Groups, or status updates.
  7. Quora: you are probably familiar with what Quora is all about: ask any question, get answers from people with real experience, and blog about what you know.
  8. Yahoo! Answers: a veteran, and often abused by spammers, this is still a great source of content ideas. Tip: browse by categories, and select most popular to see what’s hot.
  9. Conferize: discover new conferences and join the action as it happens: people, conversations and content.
  10. Content Marketing World 2013: an event you shouldn’t miss, for obvious reasons. Content Marketing World is the largest gathering of content marketing professionals in the world. In 2012, over 1,000 marketing and PR professionals from 23 different countries attended (including Level 3, Google, SAS, Qualcomm, Paychex, Aon, IBM, Nationwide, Deloitte, UBM, Caterpillar, Cisco Systems, CME Group, University of Phoenix hundreds of other leading small and large brands).
  11. The Consumer Barometer is a global effort by IAB Europe in partnership with TNS Infratest and Google to quantify the role of online in the consumer journey from research to purchase. To better understand this journey, the Consumer Barometer provides insight into past purchase behaviors and, as well as a perspective on how consumers interact with the internet as a source of information for informing purchase decisions.
  12. Contently powers content creation for cutting-edge brands and forward-thinking media companies. It also empowers professional journalists and bloggers to build careers doing what they love.
  13. Skyword is a software-as-a-service company that helps organizations reach and engage customers with quality content that’s specifically designed to succeed in search and the social web – two primary ways consumers get information today.
  14. InboundWriter: content optimization application  for writers and online marketers. It lets you create and manage all your content securely within the comfort of your workflow and from the freedom of any browser, with real-time access to search and social media intelligence about your target audience.
  15. Trapit scours the web for you 24/7 to discover up-to-the minute, personalized content on your favorite topics and interests.
  16. Newsgrape connects readers and writers. It serves more perspectives on current topics and presents your articles to a larger audience.
  17. Compendium is a content marketing platform that helps organizations capture and create original content in a branded hub for distribution to any marketing channel.
  18. GatherContent: plan, organise, and collaborate on website content.
  19. Scoop.it aims to give professionals a voice to share important ideas with the right audience, as way to increase their visibility online. It serves for inspiration, but also for content curation.
  20. Buffer is the easiest way to share the great links, pictures and videos you find to Twitter, Facebook and LinkedIn.
  21. Pitching Notes is a free website that helps PR professionals share the experiences they’ve had with reporters.
  22. Silk is a web-based platform that allows content creators to provide their content in a more structured manner on the web.
  23. The New York Times Compendium invites readers of The New York Times like you to use articles, imagery, videos, and quotations to tell your own stories using New York Times content.
  24. Glossi – lets you create and share your own digital magazines. No design or technical skill required. All that’s needed is an idea.
  25. Flockler – publish your own social magazine.
  26. Paper.li - create your own online newspaper in minutes. Automatically find, publish and promote, engaging articles, photos and videos from across the web.
  27. Artery enables you to your digital content; direct-to-fan selling for whatever you make and whoever you make it with (art, music, photography, templates, software, books — whatever you create)
  28. mYYnews: pursue your passions and interests by assembling your own individual newssite
  29. Storify helps making sense of what people post on social media.
  30. Listly lets you curate the Web’s best social lists on Listly or right on your site
  31. Unseenideas aims to be the world’s first marketplace for unpublished ideas, concepts and campaigns – an idea-based agency/creative search engine.
  32. Newsle is by far the best news aggregator ever created, because it focuses on people. Find out who are the most prominent people in your circles, and where they appear in the news. This helps if you tap the power of interviews to add relevant, influential, expert voices to your site.
  33. Issuu: publish and share your publications for free and embed on websites, blogs, and social networks.
  34. CurationSoft: discover, review and curate content from Wikipedia, Slideshare, Google Blogs and News, Blekko Blogs and News, YouTube, Twitter, Flickr and ANY RSS feed you want.
  35. Daylife Publisher Suite: publish gorgeous apps and content with a few clicks. Content Apps include beautifully pre-formatted photo galleries, polls, timelines, rivers of related content, Twitter feeds, and many more. A curatorial dashboard lets you control both the sources and relevance of the media that automatically populates selected apps.
  36. Innoblogs is a collaborative corporate blogging platform. Innoblogs allows a company or organization to use blogging across all departments to attract and convert customers through targeted search engine optimization and a 3-tiered customer conversion engine.
  37. OneSpot transforms your content into powerful and profitable content ads: create, distribute, retarget, and measure your content as ads.
  38. Kapost provides a Content Marketing Platform to enable brands to succeed as publishers.
  39. Help A Reporter Out (HARO), a service of Vocus (NASDAQ: VOCS) connects reporters with sources. This is  a bridge between journalists and publicists; allowing journalists to find the sources they need, while allowing sources to reach journalists in a SPAM-free, socially connected way.
  40. Smart Marketing Page (SMP) by Business Wire is a new communications platform that leverages the best content from marketing and public relations to create an SEO-enhanced, interactive multimedia news and information experience for consumers, reporters and target audiences.
  41. Zerys is a project management tool designed specifically for content projects, and a  writer marketplace with thousands of professional, freelance writers.
  42. MyBlogGuest, the web’s first  platform connecting freelance bloggers with publishers.
  43. ContentBLVD – just like MyBlogGuest, but with an option for bloggers to request payment for their articles.
  44. SEMRush: From researching how products are advertised to finding the best way to phrase advertising text – SEMrush is the perfect companion to a well-run marketing department. Search trends, competition, and dollars spent by your competition are among the hallmarks of taking the guesswork out of any marketing effort. SEMrush is here to be your trusted resource.
  45. YouTube: Check out the most popular videos of the day, to see what’s trending, and how the trends can apply to your content strategy.
  46. ARC™ engagement platform is a multimedia and social media platform designed to provide public relations practitioners with a dynamic tool for engaging and interacting with customers via any online location.
  47. PitchEngine is the premier content creation tool for publishing beautiful marketing messages to the web and mobile.
  48. MultiVu, PR Newswire’s multimedia and broadcast services division, offers a suite of audio, video and multimedia production, broadcasting and distribution services that bring new life to your communications.
  49. Recorded Future allows you to better understand your competition, by aggregating and measuring media coverage; quickly summarize rumored product releases for an industry over the next twelve months; and finding meaningful stakeholder connections.
  50. Storyful helps journalists, broadcasters and publishers filter breaking news, trending stories and local sources from the noise of social media.
  51. BetaKit is a new publication dedicated to providing original, real-time reporting and analysis of emerging technology news and global innovation.
  52. Linkdex helps you identify and build relationships with the influential authors in your market; build links across relevant, influential sites owned by these authors; optimize your website content; and more.
  53. Twitter Counter Top 100: see who are the top 100 Twitter users, check out their updates to learn what makes them popular.
  54. TweetLevel is a Twitter measurement tool created by @jonnybentwood at Edelman. The tool helps you identify what web links are shared the most; which are the influencers in your niche; and so much more.
  55. PRWeb – Online news and press release distribution service for small and medium-sized businesses and corporate communications.
  56. PR Newswire – news and information distribution services for professional communicators.
  57. Business Wire – commercial news distribution. Thousands of member companies and organizations depend on Business Wire to transmit their full-text news releases, regulatory filings, photos and other multimedia content to journalists, financial professionals, investor services, regulatory authorities and the general public worldwide. A professional service, highly recommended.
  58. MarketWire – newswire service offering press release distribution, media contact management, multimedia, media monitoring services and other workflow solutions for public relations, investor relations, journalists and other communications professionals.
  59. Yahoo! News – a convenient place to find headlines from local to world news sources across the Internet. More popular than Google News, Yahoo! News is more than a news search engine.
  60. Google News – a news search engine – check out the featured news, and top stories for content ideas.
  61. blekko is a consumer facing search engine focused on delivering high quality, relevant, spam-free search results. A brilliant tool to find truly relevant content.
  62. Alltop PR – indexes various PR resources, randomly categorized, submitted by website owners and approved only if they meet a set of quality requirements.
  63. Summify creates a beautiful daily summary of the most relevant news from your social networks, and delivers it to you by email, web or mobile.
  64. Everything PR – hopefully you already know who we are and what we do. If you don’t, stick around.
  65. Business Exchange – by BusinessWeek, content aggregator for business professionals. We already reviewed this, please follow this link for more information.
  66. Pressat provides a cost effective press release distribution service to multiple media outlets across the United Kingdom.
  67. PlagSpotter is a duplicate-content checker that allows users to put their webpage URLs in to start an Internet duplicate-content scanning and detection process.
  68. 9Slides is a powerful communication tool, which allows users to create unique online experience using existing presentation videos and slides.
  69. Slideshare is the world’s largest community for sharing presentations. With 60 million monthly visitors and 130 million pageviews, it is amongst the most visited 200 websites in the world. Besides presentations, SlideShare also supports documents, PDFs, videos and webinars.
  70. Piktochart allows you to create search-engine friendly infographics with ease.
  71. Visual.ly is a one-stop shop for the creation of data visualizations and infographics.
  72. Zeeik is a social video curation website (self declared a video Wikipedia). The site allows users to collaboratively curate videos for zeeiks
  73. Popcorn Maker makes it easy to enhance, remix and share web video.You can combine video and audio with content from the rest of the web — from text, links and maps to pictures and live feeds.
  74. Prezi is a presentation tool that helps you organize and share your ideas.
  75. Smashwords is an ebook distributor, which helps authors and publishers to distribute ebooks to the world’s largest ebook retailers.
  76. SocialCrawlytics allows you to identify your competitor’s most shared content.
  77. Open Marketing Blog: Open Marketing is an online marketing-services agency specializing in content marketing and inbound marketing. There’s a lot to learn from them.
  78. Marketo’s Modern B2B Marketing blog and marketing best practices community are recognized as industry destinations for marketers to share ideas and help each other drive results.
  79. Content Rules Blog: from strategy guidelines for Global Content Creators, to tips for creating better, and more interesting, content, Content Rules has got it all. And they are among the best in the business. Clients include Adobe, Cisco, Google, NetApp, PayPal, and VMware.
  80. The Content Wrangler Blog: founded by Scott Abel, a content management strategist, this is a treasure trove of tips and ideas for effective content marketing strategies.
  81. PR Daily News: I am sure all PR professionals subscribe to this. From grammar tips to surveys, analysis and breaking PR news on PR professionals and firms, PR Daily offers a wealth of tools and ideas to help you create better content every day.
  82. Vocus Marketing Suite – a powerful, next-generation marketing experience that delivers leads, sales and new customers by integrating social, search, email and publicity into one smart suite.
  83. Curata, business-grade content curation software, can easily find, organize & share relevant content for your business.
  84. StoryCrawler: an invaluable tool for public figures, public relations professionals, businesses, elected officials and beyond—essentially anyone whose life or business runs on data. It empowers users to effortlessly monitor and manage the influx of information.
  85. Marketing.AI Content Marketing Software: plan for, deliver and track performance of your marketing content in relation to target buyer personas. Drive more traffic, leads and sales from the right ones.
  86. Cadence9 is online software and marketing automation tools that will enable you to constantly post relevant and timely content.
  87. Spectate’s inbound marketing software platform provides you with a one-stop shop focused on multiple inbound and outbound channels to maximize your online marketing presence, including content creation, social media, SEO, emails and newsletters, and more.
  88.  WriterAccess is a content marketplace connecting 3,000+ customers with 5,000+ US-based writers.
  89. WordVision tracks the performance of content published on your website or blog.
  90. Curation Station is a proprietary, hosted software solution which allows users to gather information, select the items that fit their goals, and then distribute them effectively, easily and with minimal IT costs. It  can add value to your business, customers, employee teams, and clients by providing up-to-date content on any subject matter.
  91. Percussion’s software is the next generation in web content management. Delivered as a highly usable, affordable, and flexible software package, Percussion has transformed how you manage your content, making it easier than ever to accelerate your content marketing initiatives.
  92. B2B ContentEngine curation and content marketing software gives you the tools you need to accelerate the benefits of content marketing with curation and social sharing.
  93. PageOne Curator enables businesses to create and publish vibrant, interesting content using curation in half the time it takes to write it from scratch.
  94. Pearltrees is a visual and collaborative curation tool that allows users to collect, organize and share any URL they find online as well as to upload personal photos and notes.
  95. BagTheWeb helps users curate Web content. For any topic, you can create a “bag” to collect, publish, and share any content from the Web.
  96. Bundlr: create and share bundles of content: articles, photos, videos, tweets, quotes and links. Real-time breaking news from your sources, event wrap ups with a collection of online feedback, a selection of the most relevant content on your area of expertise.
  97. YourVersion is a platform that allows you to discover the latest stories on the topics you care about, all in one place.
  98. Diigo provides a browser add-on that can really improve your research productivity. As you read on the web, instead of just bookmarking, you can highlight portions of web pages that are of particular interest to you. You can also attach sticky notes to specific parts of web pages. Unlike most other web “highlighters” that merely clip, Diigo highlights and sticky notes are persistent in the sense that whenever you return to the original web page, you will see your highlights and sticky notes superimposed on the original page, just what you would expect if you highlighted or wrote on a book! You can also collaborate with other Diigo users, and share your work on the web.
  99. Qrait: a real-time curation platform designed to fulfill the needs of content curators and reduce information overload for the rest of us.
  100. Shareist helps you create great content:capture your ideas; easily incorporate text, links, videos, tweets, quotes, images, and products; connect and publish to your CMS systems and blogs; share content on your social networks with a click; export your content for use anywhere, such as email newsletters, and eBooks.
  101.  MyCurator enables you to find the content you want, and it actually reads your blogs, feeds and alerts for you. The full text and images from each article are available in the WordPress editor as you curate a post. The link to the original article is already inserted into the post for proper attribution.
  102. Launch.it is a community-sourced site with content exclusively from those who know their products best: public relations professionals and entrepreneurs.
  103.  Dialogfeed is a tool to curate, optimize & republish your social media content & conversations, right on your website.
  104.  Savepublishing.com, a free bookmarklet that finds the tweetable sentences on any web pages, saving you loads of time.  ...

Friday, May 17, 2013

Small business valuations are heading south; don't shoot the messenger.

Tuesday, May 17, 2013  

The age of 67 is effectively becoming the new retirement age with the phasing in of changes in social security rules reflecting increased longevity. Given the post-WW2 birth explosion, which lasted from 1946 to 1960,  the United States will therefore witness a tidal wave of independent business owners trying to unload their businesses and retire between 2013 and 2027.

What does this mean for business valuations? 

Most small businesses are valued at a multiple of profit.  The great recession of 2008 caused substantial downward pressure on profit. As we entered 2013, there were signs that the economy was picking up, including most-tellingly increases in housing starts. Business owners can expect to see the profitability side of equation picking up. 

On the other hand, despite increased consumer and business confidence, as we move into mid 2013, there is substantial downward pressure on the multiples. Why?
There is already an over-supply as a result of the last recession. Those baby-boomers who were ready to retire between 2008 and 2012 were caught in what was the worst recession since the thirties. Many refused to accept what appeared to unreasonable low-ball offers.  After all, they "knew" from their experience with real estate and the stock market that you don't sell when the overall market is down. For decades, the strategy of "wait and see" has paid off in these markets, at least in nominal, if not always in inflation-adjusted terms. 

But this strategy of "wait and see" may not work when it comes to selling a small business. Why? Lifestyle issues dictate that owners may not be able to wait for more than a few years, for fear they will miss those golden retirement years when they are still healthy enough to complete their bucket-list. And during business negotiations time pressure on one party favors the other party.

Even worse news...as the number of baby-boomers reaching retirement age continues to climb over the next few years, thereby increasing the already over-bloated pool of businesses available for sale, the number of potential buyers will likely dwindle. The rapidly declining cost of technology allows more and more entrepreneurs to start their own businesses and access far-reaching markets. Sure, many will fail. But they're more likely to try again, than take on the twin albatrosses of traditional business…bricks and mortar; and a fixed payroll, (as evidenced by the growing army of 1099ers.)

Am I suggesting that valuations of traditional small businesses will continue to decline over the next decade? Yes, that is very likely. The benefit of post-recession increases in profitability will be more than offset by declines in multiples.

What should you do if you're approaching retirement age? 

1) Now is the time to make sure all the business fundamentals are in place; cash flow management; financial controls, web reputation; elimination of unprofitable relationships etc.

2) Obtain an independent third party valuation by a professional valuation firm to get a realistic sense of what your business is currently worth. Remember that listing-brokers are not independent in the sense they may be over-anxious to under-value the business to increase the chance of obtaining a sale.

3))  Don't be tempted to wait and see. You are not going to be healthy forever. The baby-boom demographics are not going to change. Gen X is not going to abandon its own start-up dreams and suddenly re-embrace the high cost of getting into traditional businesses.

4)  Don't shoot the messenger. In other words, come to terms with the multiples used in the independent valuation.  Accept the hand you've been dealt and focus on dealing with the profitability side of the equation, which to a large degree is within your control. 

About the author:
Jonathan Copley is CEO of business consulting firm CFOCare Inc, which provides business valuations; M&A and strategy consulting. He is the founder of Grow50 a consortium of leading professional firms, which helps entrepreneurs plan, fund, grow, operate and sell. He can be reached at jc@cfocare.com

This article was first published in Valuation News