Q&A With Cameron Bishop, Principal Consultant at Capitus Group, on Social Media & Business Valuation
There’s no doubt about it — social media has become such an overwhelming force in the world today that if a business isn’t plugged in, it will fall behind. The impact of social media is so powerful that it has become a key factor in business valuation. If a business has very little or no online social media presence, then chances are its value will be discounted, not to mention all of the potential business prospects, feedback and customer engagement it will miss out on.
Cameron Bishop, principal consultant at Capitus Group, had a conversation with us about just how important social media is to the modern company.
What is a valuation?
A valuation is a formal process of providing the closest possible estimate of what a company is worth. In the case of a house that is going to be sold, an appraiser comes in and does an appraisal. On a far more complex basis, the same thing is done with a business.
When do you do a valuation?
Valuations are most generally done when the owner of a business is considering selling his/her company or if the owner is considering a transition of the business to other family members. There are also times when a valuation is needed for retirement or estate planning, tax purposes, etc.
Why is it important that companies use social media?
The most successful companies receive real-time feedback from their customers and prospects. That is largely available today through social media channels. As branding becomes less important and is replaced by engaging customers in an ongoing dialogue or conversation and engaging customers on an emotional level, social media becomes a primary marketing channel. And, in many cases, it becomes the only marketing vehicle.
How does social media impact a valuation score?
That’s a difficult question. I am not aware of situations where extra value is necessarily assigned to a company’s value. It is more a case of how much the value of the business is discounted without a demonstrated and sustained digital media and social media initiative. This broadly includes the quality of the website, e-newsletters, public relations and all appropriate social media channels (Facebook, LinkedIn, Twitter, Instagram, Pinterest, Snapchat, etc.).
Why do some companies that you valuate receive a lesser value than they should?
There is a whole host of reasons why companies are impacted by lower values. In fact, some won’t sell at all. The single biggest reason that companies get hit with a reduced valuation, or don’t sell at all, is because the business owner is the sole owner of all of the customer relationships and business process knowledge. If/when they leave, the buyer assumes huge risk without that knowledge. Business owners don’t plan ahead and establish a business transition plan. Other factors that impact valuation include poor or incomplete staffing in general, financial reporting issues, lack of strategic planning, and product or market related problems.
What are the benefits of working with you?
At Capitus, we help companies work through the problems that negatively impact valuation. We help business owners mitigate risk, fine-tune the company for optimum valuation and help them put formal exit or transition plans in place. A properly prepared and executed plan, in a perfect world, is a three-to-five-year process. To do it even remotely well for most companies, it takes two years. Way, way too many business owners wake up one morning and decide to sell right now. They rarely ever sell at the price they expect, if at all.
About Cam Bishop
Bishop’s 35+ years of business experience cover a broad array of business scenarios involving start-ups, product line extensions, organic growth, international business, mergers and acquisitions, and deal integration.
His career began with a critical role in building and managing a company that grew from $7 million to $400 million in revenue and $100 million in EBITDA. As CEO for that company, he managed a workforce of nearly 2000 employees located in 23 U.S. cities and several foreign countries.
Following that, he secured PE funding and launched a leveraged roll-up company which grew from nothing to $120 million in over a three year period.That company included over 500 employees based in seven U.S. cities and required the creation of all processes, systems, key management and infrastructure.
Most recently, he completed a five-year assignment involving the transition of a niche media company into a content and marketing services agency.
His background also includes prior experience in management consulting with very diverse assignments including talent assessment, sales force evaluation and recruiting along with marketing strategy, business brokering and an interim CEO role for a multi-billion dollar private company.
In addition, he has extensive M&A and deal integration experience involving nearly 60 buy-and-sell-side transactions with deal value over $600 million.
He has been the focus of articles in a variety of publications including the NY Times, KC Star, Ingrams, Kansas City Business Journal, Crain’s B2B, Medical Marketing & Media, Trade Show Executive and several others. Further, he has been quoted or published in six books on topics ranging from sales and marketing to HR and the future of the U.S. media industry.