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Is that really all my company is worth?

by on July 30, 2014

Intrinsic Value

Maybe you received an offer that you think is too low for your company.

Or an investment banker gave you a valuation that is lower than you think you’re worth.

You may even say to yourself, “is that really all the company is worth after all I’ve put into it?”

You may be asking “what are they seeing that is suppressing my value and what can I do about it?”

Or maybe, “what can I do to help them see the value of the company and generate a higher valuation?”

Those valuations are influenced by a number of factors and probably do not reflect the future value of the company.

What a Buyer Will Pay

The place to start is to determine the current intrinsic valuation for the company and use this as a baseline.  This is a different valuation than what you will receive from your accountant for tax purposes or a 409a valuation used to set your share price in your stock option grants.

This is a look at what a buyer will actually pay for your business based on market conditions.

This holistic look at the business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets, and is therefore different than what you’ve received before because it identifies the POTENTIAL of the company.

A 409a will not drive the valuation up, it just tells you where you’re at from a financial, not a strategic, perspective.

Doing more with what’s already deployed

The first area to examine to increase valuation is working capital.  This requires a unique perspective.  Standard financial statements (Income Statement, Cash Flow, Balance Sheet) do not provide insight on how efficiently working capital is being deployed, and do not allow one to calculate yields on each activity.

By looking at the return on working capital with this unique perspective a few items that can be identified and addressed quickly with tangible results that hit the top and/or bottom lines in 1 or 2 quarters.  This is the essence of finding inefficiencies and doing more with what you’ve already deployed.

Blueprint for Growth

Revenue growth isn’t a strategy, it’s a result.  That result comes from implementing a growth plan, a blueprint, that is designed to increase the company’s valuation from where you are today to where you want to be.  That blueprint provides the confidence to make the changes necessary, the clarity of focus needed to guide your company from day to day, quarter to quarter, and year to year.  And it provides calmness because you know what you’re implementing will lead you to where you want to go.  It isn’t a guessing game anymore.


If you’re wondering how you build a company that you can sell it for premium in a few years, contact me to discuss the Valuation Amplification Process.

I also invite you to download the white paper and find out How to Quickly Increase Your Valuation – A Proven 5 Step Process.


From → Strategy, Valuation

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