A strategic buyer claims our proprietary operations platform has no market value because they plan to migrate us to their ERP post-close. How do we use the IVS 105 Income Approach to prove our platform's legacy value and protect our pricing?

Question

Tyler Smith · Accepted Answer

Strategic buyers often try to discount custom technology by claiming they will replace it with their own systems. To protect your valuation, you must prove that your proprietary platform is a primary engine of your operational efficiency and customer retention.

Use the IVS 105 Income Approach to isolate the financial impact of your platform. Calculate the cost savings your custom system generates compared to standard off-the-shelf software. Show how your automated workflows reduce labor costs, speed up processing times, and lower error rates.

Demonstrate how your platform directly drives customer loyalty. If your clients use your system to track orders or manage their accounts, explain that migrating them to a different ERP introduces a major churn risk. Your software is not just an internal tool; it is a critical customer touchpoint.

Present your historical scorecards to show how your operational metrics improved after you launched the platform. This objective data proves that your software has tangible economic value, regardless of the buyer's future integration plans. If they want to capture the high margins your business generates, they must pay for the technology that makes those margins possible.