Know the factors that drive your valuation before you exit.
We provide indicative and formal business valuations for owners who want to sell and exit at a premium value.
First step, understand how the market looks at your business.
Investors seek to acquire companies which provide an above average return at an acceptable level of risk.
Therefore, business valuation is an exercise to explain the risk and return profile of your company.
What is your value gap? Perceived value vs actual value of your business.
While the value gap isn’t a highly complex problem, companies don’t often recognize it until they attempt to transact in the market.
You need to think on a broader, macro level of what factors drive the value of your business.
The Exit Value Score (EVS) let’s you quickly determine how well you’re doing in each value creation area and what you need to improve before you try and exit.
Why value your business?
Less than 20% of businesses have created “transferable value”, meaning if you put your business up for sale tomorrow, you could find a buyer and convert it into enough cash to fund your future.
A valuation that determines the exact price range a buyer will pay for your business – will help you determine whether selling your business makes financial sense.
It’s not about a report, it’s a discovery process that puts information and knowledge into the hands of owners critical to value enhancement.
Valuation conversations need to happen far sooner. Here’s why…
Valuation is about growth and returns, it’s cumulative.
The sooner you know, the more time you have to make the right moves. This creates a compound effect inside of your business, which allows you to stack multiple value drivers on top of each other.
This approach builds up to a far more optimal outcome than if you continued to operate your company without this know-how.
Companies that display future growth, earnings potential and provide a return on the capital invested exceeding their cost of capital, create value for investors and buyers.
Given the amount of money and time you’ve invested, you need to have a clear shared understanding of the key factors that are driving value and influencing your business’ returns over time.
There is value in knowing your value.
Are You Building Exit Value?
The amount a business is worth ranges greatly based on so many factors that impact the valuation, terms and ultimate exit outcome for you as the founder.
Depending on the size of your business, there could literally be hundreds of thousands or even millions of dollars at stake if your valuation isn’t maximized at the point of exit.
Given the single biggest financial opportunity for almost every founder is an exit, does it not make sense to know what your business is worth and give yourself some time to build up to that exit value?
We think so, but so should you…
To understand your business you need to step and review it using the most objective lens you can. From earnings quality, risks and what multiples companies like yours actually sell for in the market.
It’s about confidently assessing the quality of your business and then putting together the roadmap to increase that value in the future.
The ROI is in knowing what steps to take and in what order to do it.
The valuation and exit lens gives you a vantage point like no other. You see the quick wins, the opportunities ahead, assess your risks and understand IF and WHEN you should exit.
Every company trades in a range of value. This range will always depend on three things.
Free resource to help you increase your valuation
and prepare your business for exit!
Frequently asked questions about Business Valuations
The purpose of a valuation is to measure the equity (share value) of your business. It’s based on a combination of understanding the profitability, operations, risks and the growth potential of the company. Financial statements are used to quantify the valuation figure with the removal of abnormal or non-recurring expenses or revenues.
Valuing a business comes down to an honest assessment of both risks and returns. Risks often include a combination of industry risk, economic uncertainty, and factors directly related to the individual business. The return is normally based on profit or earnings.
We can measure the value of your company with 15+ methods. We select the most appropriate method based on size, industry and recent market transaction activity. We have access to leading market data that assess your company against multiples or beta factors from leading financial databases. We couple this with a qualitative assessment and analysis that can be updated and used for high level strategic planning, capital raising or M&A transactions.
We are a firm proponent of valuing companies using a present and future lens and use both the historical financial data and future earnings and cash flow potential. We can use “comparable company” values and precedent transactions as well. But to us, intrinsic value is often the best measure of a company’s valuation.
A valuation is the perfect place to start before you make any major decisions around the future of your company. Think of it as a “trigger event” that is intended to create actions that will allow you to understand and improve your business by looking into the most important areas.
Yes. Most owners are not aware of the value of their business. This is a missed opportunity, as it’s quite often their biggest asset and many dollars are at stake. If you want the highest sale price you need to be informed to make good decisions. You need to engage in a clear plan to improve the value of the company before you get to the negotiation table.
Business valuation is not just a “number”. It needs to include the key valuation drivers and an assessment of the risks facing the business. Also, a valuation should provide a clear roadmap to improve the value of your business in the future.
A proper valuation should take between two and three weeks once all the relevant financial data and information is provided.
A business appraisal is simply an estimate on what your company might sell for in the marketplace. It cannot be relied upon and has very limited information to guide you on how best to position your business for exit. A valuation is a more formal and thorough document prepared by a qualified professional after detailed analysis of the business in the context of performance and the market around them.