We've just finished analyzing our pool of Sellability Score users for the quarter ending December 31, 2014, and we found some interesting data regarding the impact your social media footprint has on the value of your business.
To give you some background, we offer The Sellability Score questionnaire as the first of twelve steps in The Value Builder System, a statistically proven methodology for increasing the value of a business.
We asked 14,000 business owners if they had received an offer to buy their business in the last 12 months, and if so, what multiple of their pre-tax profit the offer represented. We then compared the offer made to an average business that has a large social media following.
Our definition of your social footprint is the aggregate total of your Twitter "followers," Facebook fan page "likes," Good Plus circle members, and LinkedIn connections. We even included email opt-ins to get a clear representation of the total number of people who have "opted in" to hear from either your company or its founders.
3.08 vs. 4.87 Times
The average offer received among all of the businesses we analyzed was 3.7 times pre-tax profit. However, when we isolate just those businesses with at least 10,000 connections, the offer multiple goes up to 4.67. If you have more than 100,000 people in your opt-in footprint, the multiple goes up to 4.87.
Likewise, if you have no followers, you're likely to get a steep discount. The average multiple offered to companies without an opt-in strategy was just 3.08.
GoPro--a Media Company?
To give you a dramatic example of how your social media footprint can affect the value of your company, take a look at GoPro. Before Apple won a recent case against it, GoPro was rumored to be an acquisition candidate for a consumer technology maker or a media company.
Wait a minute, did I say "media company"? Yes. Along with consumer goods manufacturers, GoPro is also attractive to media companies that want a play in action sports. GoPro owns the largest brand channel on YouTube with almost three million subscribers.
The GoPro camera technology is truly amazing, but one might even make a case that the GoPro technology is easier to replicate than GoPro's social footprint of almost 3 million You Tube subscribers.
Either way, the company's database of subscribers and connections is a strategic asset that will one day garner it a premium acquisition offer. While you may not be shooting for millions of followers, having a database of people who have opted into a relationship with your business will drive up the value of your company.