Employee benefits can impact a firm’s valuation
25th August 2011 · 0 Comments
When it comes to evaluating a business’ resale capacity, one of the most overlooked yet important aspects is to consider its health benefit policies.
As part of the valuation process, most would consider the health benefits program as a liability for a new owner. However, the type of health benefits given workers also indicates the management culture to a potential owner.
If a company provides excellent employee benefits, workers know their current regime values them as employees. Through the years, I have found that companies that provide their work force with a exceptional benefits program tend to have a “can do” culture on the job. For a prospective buyer, this factor carries an intrinsic value that typically adds value to their prospective company.
On the other hand, a firm that doesn’t have an employee benefits program or a rudimentary one demonstrates that the current regime doesn’t value its workers. While the savings from these programs look good on a corporate balance sheet, it can indicate underlying factors that could create unforseen issues when a new owner takes over.
Jim Montgomery is the president of Montgomery and Associates, a San Antonio-based law firm.Tags: Austin Entrepreneurs, Capital Ready, Entrepreneurs, Funding, Funding Texas, Startup Capital, Texas Entrepreneur Networks, Texas Entrepreneurs, TXENetworks.com
