There are inevitable situations for every business owner when the value of the company becomes a critical issue. Unfortunately, few are prepared to make a compelling case for premium value when the moment arises. Most owners spend their career focusing on revenues and managing operations, naturally assuming that greater sales and profits correspond with a growing valuation. But it does not always happen that way. Value is a complicated concept, and building a compelling case for value takes deliberate positioning of the company. And it takes time. It is too late to affect value if owners wait until the last moment before raising capital or selling.
There are a variety of situations where specifically positioning a company for maximum value pays enormous dividends.
Capital needs. If there is an upcoming need to raise capital, owners must be able to tell a compelling story about the value and integrity of their company, their strategies and, most importantly, their growth opportunities.
Pre-sale. For owners planning a sale in the next several years, it will be highly profitable to plan for and take control of the process now. This also holds for owners not specifically planning to sell but who want the security and flexibility that comes with having a variety of liquidity options that comes with being properly positioned.
Growth companies. Though typically younger, high growth companies sharply focus on value goals, sometimes more so than mature organizations. They realize they may have only one shot in their high-stakes game, and they want to make it count. Strategizing for maximum value creates a detailed picture of what the company must look like in order to attract the highest valuation.
Succession upcoming. When a transition is anticipated it is best if it occurs when the company is as healthy and valuable as possible. A roadmap to creating value gives assurance and helps create buy-in from all parties.
Owner’s age or health concerns. A business owner’s age or health eventually brings transition and valuation to the forefront. Any owner over forty years of age should have a specific value positioning plan for the company. Changing life circumstances and age inevitably increase the likelihood of a transition of some form, voluntary or not.