Why It Is So Important To Understand The Value Of Your Business?
One of the first questions we ask new clients is what’s the goal, what are they looking to achieve with the business, and are they looking for an exit at some point down the road.
Some, but by no means all, will say that they are building their business so that they can sell it. Obviously this is easier said than done, but irrespective of whether or not we think this is possible, the first thing that needs to be ascertained is the current value of the business.
Often event business owners only have a vague idea of the value of their company, and yet have wildly optimistic ideas of its value in five years time.? Recently we asked a client’s senior management team what the value of the business could be by the end of the decade and the answers varied from ￡1m - ￡100m!!?
For this client, based on forecast revenue and profitability, ￡100m is unlikely, but with a better understanding of the right levers to pull to produce structured growth, we are confident that in time, this team can build a really valuable business and a desirable acquisition, irrespective of their desire to sell.
The good news for all event business owners is that the 6 key levers that maximise value at sale are the same ones that drive growth and maximise returns for an ongoing business so whether or not they are building for a sale, or running the business as a lifestyle choice the process that they need to go through is broadly the same.??
Kershaw Partners have developed a very simple industry specific valuation process, based on our knowledge of the event industry, which has helped dozens of our clients to understand both the value of their business and what factors determine that value. We then consider where they want to be in 3-5 or 10 years and look at the underlying fundamentals of the business that can significantly increase their value. This in turn guides discussions on future strategy.
Many believe that financial performance provides the answer to value. It does, but it is by no means the only thing that determines the value of a business to a prospective buyer.??
There are a number of Buyability Factors such as market opportunity and growth trajectory which can have a major effect on both the multiple applied and saleability. This is why we see tech businesses, in a global market, that are yet to make a profit, sell for billions.?
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However, to maximise the value of more standard business’, the aim is to have long term visibility of earnings, a successful Lead Generation & Conversion process in place – automated where possible, and a functional structure with systemized management and customer engagement processes that means the business can run without dependency on the owners or key staff.
If you're interested in discovering more about the Buyability Factors and what your Event business is worth in today's market, we're offering a complimentary 15-minute valuation call.?
During this call, we'll discuss your business's unique attributes, financials, and growth potential to provide you with a clear picture of its current value.
Don't leave the future of your Event business to chance.?
Take the first step in gaining valuable insights by scheduling your free valuation call with us today.
Your business's worth may pleasantly surprise you!?