Blog Article by BASDA member Real Asset Management
For any organisation facing merger or acquisition activity, maximising value is a major challenge. And while cash rich companies are keen to expand where possible, no organisation wants to acquire a business that is likely to need unexpected investment in the current climate.
Yet with the majority of organisations still reliant upon spurious fixed asset data held in spread sheets, achieving an accurate picture of the balance sheet and true profitability is proving a major challenge and a potential deal breaker.
Failure to put in place an accurate, up to date asset register could result in the company assets being significantly undervalued. It could also undermine the organisation’s ability to demonstrate strong cost control through asset reallocation and, with no asset maintenance history, a potential purchaser has no insight into asset health and the potential investment required, which could further reduce the price offered.
Acquiring organisations also need to understand asset health. Information on asset maintenance history and remaining asset lives is key to determining the required ongoing investment.
In this economy it is also essential for every business to demonstrate strong cost control to improve corporate value, and good asset management is key to that process. There has been a growing move to recycle assets and maximise the asset lifespan, from office equipment and IT kit to major pieces of manufacturing equipment.
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.
Should any merger and acquisition activity really take place without a trusted, accurate audit trail of company assets?