Unlock your business' equity value sooner.
Every business should know the key factors that drive value and have a plan to maximise their exit price.
Why should I focus on Valuation?
The purpose of Valuation is to enable your business to maximise it’s equity value. Yet 88% of owners have no idea what their business is really worth.
How can you improve something if you have no starting point to work from?
Valuation is not a static number like some treat it. It moves in seasons and goes up and down. Some years you will grow, others you’ll invest and overtime you want to see a return.
Valuation connects how much the business has achieved over the years and the expectation you have around your ideal exit price. There is always a gap between these two numbers so you need a method and process to unlock that value out of the business and back to you.
Valuation is the key.
What is your ‘Value GAP’?
Your “Value Gap” is the difference between what your company is worth today and what you need it to be worth to release the equity value out of the business and back to you (the owner).
Too many businesses fail to ever realize their true potential because they chase growth rather than building the true drivers of value.
It’s not just about selling your business. Knowing what drives your Valuation will harness its strengths and improve the functional areas. De-risking the business and making it a more attractive asset buyers will pay a premium for.
Valuation gaps appear in businesses that don’t place emphasis on the financial and non-financial factors that drive their growth, profit and future cash flows.
Maximising business value.
You don’t become uber wealthy trying to scale a business. There’s too much cash going out the door. Most of the liquidity and profit comes from a sale.
Your business follows a predictable path, from start up, into growth mode, maturity and then exit. The time and value you create varies, but this lifecycle holds true for everyone.
Once you plot where you are on this journey you can pin-point when you should invest and what points on the cycle you should exit.
Positioning your business to maximise it’s equity value at the right time is a direct benefit of using a Valuation driven approach.
The simple formula to understand business valuation.
In simple terms the valuation formula for a business
can be defined as
Valuation = Profit times a Multiplier
(“V” = “P” x “M”)
Every industry has a standard multiple – an industry norm – to benchmark and compare your business against others.
When an acquirer looks at the amount of equity value you’ve created they will compare you to these benchmarks.
Therefore finding ways to push your Valuation above these benchmarks becomes the goal.
Increasing your Profit, is a result of trading your business the right way.
But, by increasing your business’ Multiplier – that’s where your Valuation will improve the most.
Book your business value strategy session and we'll send you our Valuation Playbook - Plan the Ideal Exit
What levers do I pull to increase my business value?
There are 6 levers to value creation. Use each lever to get to the next and your business will build up it's equity value
What factors influence value?
After many business valuations, we’ve isolated some key factors that both grow and de-risk your business.
These factors not only move the business above industry benchmarks they also build a case for a strategic buyer to see the equity value you’ve created.
Curious to know what drives the value of your business?
Above the line factors that enhance asset value.
Financial Optimisation
Management Information Systems
Team & Culture
Competitive Advantage
Growth Potential
Marketing & Brand
On the line factors that compare your business to others.
Industry
Performance Benchmark
Financial Performance
Below the line factors that decrease equity value.
Operational Risks
Working Capital Management
Asset & Liability Management
Owner Dependence
Quality Management
External Factors
The process to maximise company value
Maximising the value of your business takes time and investment but the rewards are significant and life changing.
The benefits of our approach ensure you have a clear ROI with step-by-step guidance and support.
Easy
Our unique process is designed to provide you with an accurate assessment of your business performance and value. We understand your time may be limited so we have formulated an efficient and cost effective way to get the data and information we need to assess your business in the right way.
Thorough
We will review not only the financial aspects of the business but also the non-financial/operational issues and the personal aspirations you have for the future. Selling your business is not simply a financial choice, it's a highly emotional decision as much as anything and involves big changes in your life. You will need time to step through the process and be sure you're ready to let go.
Valuable
Together we'll design a Valuation model and process to more accurately assess your business and outline the best way to handle common pitfalls such as owner dependence, finances, management succession, risks and you're readiness to exit. We'll go through the specific steps to close the Value Gap and Maximise value for an ideal exit.
Exit
Designing a Value Acceleration Strategy to improve the earnings, growth and multiple of the business takes time and investment. Getting the business into a saleable format and ready for a buyer. We have a unique process that walks you through this to ensure we add in as much value as possible and time the sale perfectly.