focussing on the value of your company
DESCRIPTION
a powerful management toolTRANSCRIPT
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© 2012 The Exit Planning Company
Focussing On the Value of your Company a Powerful Tool
Presented by:Jean-Bertrand de Lartigue
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© 2012 The Exit Planning Company
Value, Measure, & Increase the Goodwill
Goodwill
=
Potential sales value
–
Liquidation Value
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3
Liquidation Value
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Replacement Value
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Investment Value
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Fair Market Value
The amount at which a business or property would change hands between a willing buyer and a willing seller when neither is acting under compulsion and when both have reasonable knowledge of the relevant facts.
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7
Going-Concern Value
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Value vs. Price
Price of business is part most debated/fought.
Buyer and Seller usually DO NOT agree or share same perspective.
Buyer synergies economies of scale, lifestyles, etc
Seller urgency, health, disputes, etc
PRICE
Value is perceived - price is reality
Understanding Value
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Value Drivers
Profit X 6
Profit X 3
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Value Drivers
Branding Customer Dependence
Dependencies (Vulnerability to economy)
Industry Status (Market Trend)
Market Customer Concentration
Market Niche
Market Penetration
Market Risk
Market Saturation
Public Relations
Marketing
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Value Drivers
Accreditations
Assets (Equipment/Machinery)
Cyclical nature
Intellectual Property
Inventory Turns
Licenses
Obsolescence (Equipment, Systems, Inventory)
Portability
Procedure Manuals
Product Maturity
Purchasing Power
Research & Development
Regulations
Supply Dependency
Systems
Technology
Transition / Training
Operational
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© 2012 The Exit Planning Company
Value Drivers
Barriers to Entry
Competitive Advantage
Product Differentiation
Competition
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© 2012 The Exit Planning Company
Value Drivers
Control Or Lack Of
Family Relations
Knowledge
Owner Dependency
Management
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© 2012 The Exit Planning Company
Value Drivers
Aesthetics
Lease
Location
Other advantages
Premises
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Value Drivers
Benchmarks CapEX Contracts Cost Controls Credit Rating Earnings level Earnings Sustainability Financial Cleanliness Financial Leverage Financial Plans and Budgets Free Cash Flow Future earnings Growth History Margins Receivables and
collectability (Liquidity) Risk ROI Sales levels
Tax related (Rational/Irrational)
Financial
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© 2012 The Exit Planning Company
Value Drivers
Creativity
Cross training
Culture
Efficiency
Employee Manuals
Employees
Empowerment
Job Descriptions
Key personnel
Leadership
Unionization
TUPE
Human Resources
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42 $
38 $ 25 $
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Reduce Risk
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External
Factors
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Internal Factors
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Double
Triple
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How do we grow value?
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Owner Driven Business
Value Pyramid
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People Driven
Value Pyramid
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Value Pyramide
Business Run by Systems
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Value Pyramide
Culture
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Measuring Goodwill Value
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© 2012 The Exit Planning Company
200+ questions
Covering all aspects of business value
The Goodwill Diagnostic
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© 2012 The Exit Planning Company
Is your firm ready for your departure?1. Does your company have a 3-5 year strategic objective, outlining your overall goals? If so, how effective
is it?
2. How effectively does your company utilize key performance indicators to track its ongoing success?
3. How complete are your company’s systems for recruiting, retaining, developing and managing your employees?
4. How defined is your company’s unique market position (why your business is unique) in the eyes of your customers?
5. How dedicated are your employees to doing the best job possible, even when you are not present?
6. How effectively does your company utilize an annual calendar to manage its business cycle (i.e. employee reviews, budget reviews, special events, etc)?
7. How effectively does your company deliver on its production or service demands?
8. How well do your employees work together as a team for the betterment of the company?
9. How effective are your lead generation and sales systems when you are not around?
10. How well would your company survive if you took a six-month vacation?
Total /100
Mini Diagnostic
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© 2012 The Exit Planning Company
Goodwill Value
Goodwill Value %,
48%
Potential Goodwill
Value, 52%
Goodwill Value by Business Activities
33%40% 45%
65%
47%58%
67%60% 55%
35%
53%42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PotentialGoodwill Value
Goodwill Value
Total Goodwill Value
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© 2012 The Exit Planning Company
Business Drivers
Owner47%
Employee46%
Systems7%
Business Drivers
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Drivers by Category
0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%
100.00%
Owner
Employee
Systems
Business Drivers
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General Value Indicators
0%10%20%30%40%50%60%70%80%90%
100%
Str
ateg
y
Ope
ratio
nal
Inde
pend
ence
Cor
pora
teC
ultu
re
Tar
get
Mar
ketin
g
Mar
ket
Pos
ition
ing
Bra
nd im
age
Fin
anci
alC
ontr
ols
Bud
get
Acc
ount
abili
ty
Fin
anci
alA
naly
sis
Fin
anci
alH
ealth
Ope
ratio
nal
Effi
cien
cy
Gen
eral
Sys
tem
izat
ion
Bus
ines
sA
naly
sis
General Value Indicators
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© 2012 The Exit Planning Company
Operations Goodwill Breakdown
0%10%20%30%40%50%60%70%80%90%
100%
In-Depth Analysis
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Value Building Tools
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Business Manuals
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Employee Manuals
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Analysis Manual
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Business Calendar
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By focusing on value, you get…
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Management or Employee Buy Out/In
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The Fair Heired One
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