Using your valuation number to drive management focus
Part 4 of 4 post series on - Valuation Mindset, a Prequate tool for management effectiveness
Now that you have arrived a number, based on my previous post on identifying and quantifying the right value driver, this post looks at providing guidance on how this can be linked to management effectiveness initiatives.
This post has 3 aspects covering the utility of the Valuation Mindset in management & strategy:
- Linking valuation as a number to organizational/ business unit strategy
- Using valuation as an anchor for planning and outcomes
- Drawing incentive structures aligned to the valuation number
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Linking valuation to organizational & business unit strategy
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Percolating valuation as a number to all planning exercises at all levels
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Incentivising under a valuation mindset
For a value based planning process to be truly effective, incentive structures (compensation) from the top down should be aligned with the goal setting process.
A balance between long term and short term goals will need to be defined at both the organizational and business unit level to achieve critical value based milestones.
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Wish to read the other articles in the series? Links are below.
Part 1: Valuation, more than a number? [ Read ]
Part 2: The Valuation mindset [ Read ]
Part 3: Finding the right value driver for your business [ Read ]
Part 4: Using valuation as a strategic tool - This one! [ Read again ]
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About me:
An MBA from FMS - Delhi, my experience has taken me through investment banking and transaction advisory and Banking. Prior to this, I also dabbled with entrepreneurship in a food startup. Currently working with Prequate, a management^finance advisory in the Strategic Finance Office & Investment Banking, Mergers & Acquisitions verticals.
More about Prequate? [ Website ] or [ Book some time for a chat ].
I can be reached on email at sandeep[at]prequate.in.
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Where does what I do at Prequate fit in?
Disclaimer: Please note that these are our views are based on our experience in being advisors and working with various organizations across 20+ industries. They are for the limited purpose of educating the leaders of a company. The rationale and the procedure to be followed can vary significantly based on the context, exact nature & size of the business.