ENTERPRISE VALUE DRIVERS

MARKET-BASED BUSINESS VALUE DRIVERS

  1. Growth – Your company can demonstrate quantifiable and historic growth greater than its competitors and can substantiate growth projections greater than the industry rate. It is important to assess company growth, industry growth, and your customer advantage.

This is the MOST impactful value driver of all. That is why we created Exit Your Way®® We help companies get into hyper-growth thus improving the enterprise value extensively. We would love to share with you more about how we grew our client’s enterprise values over 35+ million in 2018.

2. Large Market Potential – The market supports significant growth of the business. Indicators of this value driver include market size, niche clarity, competitive monitoring and future market growth.

  1. Dominant Market Share – Your company owns the highest percentage of the available market relative to its competitors. Can you measure where your company stands?
  2. Recurring Revenue – Your company can rely on a portion of future revenue from contractually committed customers. Analyze your customer contracts, customer mix, and customer retention.
  3. Barriers to Entry – There are significant obstacles facing a new entrant into your company’s market. Can you articulate your legal, market and capital barriers to entry?
  4. Differentiation – Your company has a product/service with unique characteristics that provide a competitive advantage. Proof of qualitative and financial differentiation should be assessed.
  5. Brand – Your company has a recognizable brand that reinforces the business’ presence in the marketplace and supports the company’s objectives. Brand awareness, advantage, and protections are important areas to explore.
  6. Margin Advantage – Your company enjoys gross and net margins greater than the industry norm. Can you provide a history and explanation of historical margin trends? Do you have processes in place to constantly improve margins?
  7. Customer Diversification – Your company has a well-diversified customer base. Do you have any customer concentration? What are you doing to continuously diversify your revenue?

OPERATIONS BASED VALUE DRIVERS

  1. Company Overview – An outsider can easily obtain a holistic understanding of your company including your company’s performance, practices, culture, discipline and mission. Consider things like your company’s web presence and if an employee can succinctly communicate what the company does, why and how.
  2. Financial – All of your company’s financial matters are in order and you follow best practices. How quickly can your company generate financial information? What operating reports does your company use to make decisions?
  3. Sales & Marketing – Your company can produce revenue in a proven and systematic way, ensuring the business is sustainable and not simply based on the efforts of individuals within the business today. This would be demonstrated through sales and marketing objectives, comprehensive market research, repeatable sales processes and regularly reviewed metrics.
  4. Operations – Your company has the ability to deliver on the sales promises made to the marketplace and to do it in a systematic and process-driven manner. What performance metrics help you measure this? How does your company compare to industry standards?
  5. Customer Satisfaction – Your company tracks and uses key measures to meet customer expectations at all levels. Achieving this value driver means your company establishes goals, develops a plan and continuously measuring customer satisfaction.
  6. Senior Management – Your company has a leadership team/individual in place to realize the company’s vision and mission while helping the owner achieve his/her objectives. Are clear roles and responsibilities, succession and compensation plans communicated throughout your company?
  7. Human Resources – Your company has the ability to find, develop, and retain quality individuals that enables success in all aspects of your business. Do roles of each employee support your company’s goals? Do your compensation and benefits follow best practices and motivate your workforce?
  8. Legal – You have all legal matters in order, documented, and your company follows best practices. Also, there are no claims for or against your company, or its employees, resulting in formal proceedings.
  9. Innovation – Your company understands that innovation is invaluable to creating an ongoing competitive advantage; it has a proven and systematic way to drive and capture innovation at all levels and encourages innovation in every area of the business.

Focusing on these 18 value drivers will make your company more salable and will assist in attracting a higher valuation multiple. These drivers also establish the highest standard for building operational excellence in small and middle market businesses.

Most companies need to get a lot of things in order before an exit can or will ever happen. The Exit Your Way®® team is committed to helping business owners make the exit they had always hoped for.

DO NOT WAIT!!! Whether you are 1 year or 10 years from your goal to exit. It is imperative to know what you will need to do to get the number and value you had hoped for or need.

We have never heard a business owner say “wow my business is worth way more than I expected.” It’s usually quite the opposite.