focussing on the value of your company

© 2012 The Exit Planning Company

Focussing On the Value of your Company a Powerful Tool

Presented by:Jean-Bertrand de Lartigue


Value, Measure, & Increase the Goodwill

Goodwill

=

Potential sales value

–

Liquidation Value


3

Liquidation Value


Replacement Value


Investment Value


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.


7

Going-Concern Value


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


Value Drivers

Profit X 6

Profit X 3


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


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


Value Drivers

Barriers to Entry

Competitive Advantage

Product Differentiation

Competition


Value Drivers

Control Or Lack Of

Family Relations

Knowledge

Owner Dependency

Management


Value Drivers

Aesthetics

Lease

Location

Other advantages

Premises


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


Value Drivers

Creativity

Cross training

Culture

Efficiency

Employee Manuals

Employees

Empowerment

Job Descriptions

Key personnel

Leadership

Unionization

TUPE

Human Resources


42 $

38 $ 25 $


Reduce Risk


External

Factors


Internal Factors


Double

Triple


How do we grow value?


Owner Driven Business

Value Pyramid


People Driven

Value Pyramid


Value Pyramide

Business Run by Systems


Value Pyramide

Culture


Measuring Goodwill Value


200+ questions

Covering all aspects of business value

The Goodwill Diagnostic


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


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


Business Drivers

Owner47%

Employee46%

Systems7%

Business Drivers


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


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


Operations Goodwill Breakdown

0%10%20%30%40%50%60%70%80%90%

100%

In-Depth Analysis


Value Building Tools


Business Manuals


Employee Manuals


Analysis Manual


Business Calendar


By focusing on value, you get…


Management or Employee Buy Out/In


The Fair Heired One

focussing on the value of your company

Documents

exit planning

company

ers

goodwill

business

seller

effectively