Value Drivers
Value drivers are the gears of your business and measure Growth, Brand, Marketing, Senior Leadership, Innovation, and more. The importance of each business’s value drivers will be different, depending on your individual situation.
In “Ultimate Exits”, Dr. Tom McKaskill very generously gives his permission to share his thought leadership.
As Dr. McKaskill says, fundamental to the sale process is an understanding of the value the buyer will extract from the business. The purchase price (value of their investment) is derived from their estimate of the future stream of income, discounted by their estimate of the risk rate – or their required rate of return. What follows in this chapter is largely excerpted from “Ultimate Exits”, and is acknowledged with thanks.
When you think about it a little more, you can see when a business makes the effort to provide the buyer with a different, more positive, more profitable future for the acquisition, the likelihood of getting a higher price than simply a multiple of past earnings is much greater.
The Buyer’s Perspective
You know your business is great, you’ve proved that already but how do you really make it even more attractive to a buyer. Dissecting the nuts and bolts of your business from a buyer’s perspective is integral to securing the best price.
Future Income Streams
Past profits are not your only valuation – you don’t invest on past income streams you buy a business for it’s future income streams and getting people to have an understanding of future income streams is a strategic value enhancer for your business.
Increasing Profitability
Cutting back expenses, overheads or advertising and the like isn’t showing more profit – it’s window dressing and the buyer will be on the front foot about this.
Investigating the real money drivers will save you time and in turn save you money for when you are ready to sell to a savvy investor.
Building Growth Potential
You are invited to take a free 15-minute survey to measure the strength and durability of each of the 18 value drivers in a business. You can find out the value drivers in your business and how you currently shape up by completing our FREE assessment at www.TheExitStrategyGroup.com.au/FreeReport.
Think of it like a body scan for your business that creates buyer value.
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