Overcome Barriers to Business Valuation Growth (P1)

Buyers and investors in companies are buying or investing in the potential for future growth, not only in sales, but more importantly, growth in earnings, or more precisely EBITDA. They assess the organization for predictability of future earnings as part of their business valuation.

Ensuring the future becomes reality results not only from keen insight and excellence in execution, but also from overcoming any barriers to improved earnings and maximizing the valuation of the company. Essential actions to overcome the barriers to growth include:

  • Aligning the organization to the Valuation Driven Strategy plan
  • Reducing management team dysfunction inhibiting the performance of the team
  • Defining competencies  and  behaviors critical to the strategy

Companies that achieve their growth goals establish  processes  and  practices  that  embed each  of  these  actions  into  the  day  to  day activities of the organization. They recognize that the path to maximizing the valuation of the company, increasing shareholder wealth and improving stakeholder value drives precisely through those three actions.

Aligning the organization to the plan

Alert presidents & CEO’s know that an organization may agree with and understand the Valuation Driven Strategy  plan  but  still  not  be  aligned  to  it. There may be significant engagement with the need   for   the   strategies   and   actions,   while unspoken  concern  exists as to the path  to the goal,  the  timing,  and  the  roles  and responsibilities of those charged with execution.

Alignment requires “adjustment of parts in relation  to each other”. It is not uncommon for the Valuation Driven Strategy  process to unconsciously limit input, minimize visibility of ideas and fail to resolve differences within the management team. These situations prevent development of the best tactics and priorities for the business and create risk that the management team does not agree on the actions, roles, and responsibilities. The Strategy may sit on a shelf.

Achieving  an  actionable  plan  and  an  aligned team requires participation that is broad but efficient; collaboration  and  consensus  created by building on the best elements from many perspectives, experiences and capabilities, and agreement achieved through debate, dialog and resolution of differences.   Incorporating these elements  provides  tactics  and  targets representing the best  thinking  of the business, and agreement around the goals, path, actions, and  responsibilities.

The Management Team Effectiveness is one of the key Valuation Drivers in the Invest-Ability Index™. Scoring high on that dimension is critical to future buyers and investors as they look at ownership transition and the predictability of future earnings that come with a strong and effective management team.

Next post: Part 2.

Have any Question or Comment?

Leave a Reply

Your email address will not be published.

I accept that my given data and my IP address is sent to a server in the USA only for the purpose of spam prevention through the Akismet program.More information on Akismet and GDPR.

* Copy This Password *

* Type Or Paste Password Here *