Conclusion

Retailers also have a chance to improve value by adopting a more robust attitude to asset tracking. One large corporation was recently able to add significant value by linking in store asset value to the time left on store leaseholds. By apportioning new store assets across the remaining life of each store lease in a number of refitted stores, the organization dramatically improved its P&L. This had a big impact on the valuation when the company then sold a number of its stores to a rival.

For those cash rich organizations looking to exploit the growing numbers of distressed businesses, the opportunities in the current market are significant. But any business looking to sell needs to ensure its asset information is up to date and trusted. Without accurate records about asset life, usage and refurbishment history, potential acquirers will struggle to put a correct figure on asset value.

And without access to a consolidated asset register that also records asset maintenance, it will be impossible to determine an asset’s longer term value to the business. The result will undoubtedly be a significant reduction in any potential offer – or a significant business risk incurred by the acquiring organization.

In contrast, an accurate asset register provides a platform for improved cost control and the ability to demonstrate sound business practice. It will also offer additional value to a potential acquirer by providing a platform for rapid post merger/acquisition consolidation – a key issue in achieving business success and reducing costs.

Non-organic business expansion may look strongly appealing in 2010 but with cost control under focus and a sustained reluctance to embark upon unscheduled capital expenditure, should any merger and acquisition activity really take place without a trusted, accurate audit trail of company assets?