Achieving Transferrable Value

With your business well on its way to methodically improving its transferable business value, you will naturally become interested in what an exit from the business could look like. We will help you understand various potential succession and/or exit options. Equally important is for us all to understand your specific personal goals and needs related to a potential exit. We are proficient at modeling various financial scenarios as part of the process. Our ultimate objective is for you to be fully in control of your destiny.

• Identified Succession / Exit Options
• Well Defined Owner Goals
• Full Financial Modeling of All Scenarios
• Business Owner Fully in Control

Building transferable value requires the business to be both Ready and Attractive. Being ‘ready’ encompasses many aspects, including documented proven processes, a strong management team that can operate without the owner’s involvement and an infrastructure scalable for growth. Being ‘attractive’, in simple terms, means your numbers (operating/ financial performance) matches your articulated strategy, with the resultant narrative about your business being highly attractive to a third party (e.g., potential buyer or investor).

Your CFO has tools available to benchmark business attractiveness and exit readiness, identifying areas of needed improvement and guiding you on initiatives to implement those improvements.

In simple terms, the transferable value of your business is the cash flow generated multiplied by a number (the ‘multiple’) that reflects a buyer’s perceived confidence (or lack of confidence) that those cash flows will continue, and grow, into the future once they buy the business. 

As you Climb to Value with your CFO, they will continually work to improve both sides of the equation for transferable value. Improving the financial performance as well as both reducing risk and providing guidance for improving the ‘intangibles’ of your business.

For most businesses, two-thirds of the transferable value assigned by a buyer or investor comes from their assessment of the intangibles.  These are considered strong indicators of the health of your organization which, in turn, provide the confidence (or lack of confidence) that your organization will continue to deliver on those cash flows once you have exited.  Those intangibles are commonly referred to as the “4 Cs” or “Four Capitals” of your business:

• Human Capital
  Strong culture,  management team, with the right people in the right seats
• Customer Capital
  Strong customer relationships, diversified customer mix 
• Structural Capital
  Operations, technological infrastructure, documented proven processes 
• Social Capital
  The external reputation of your business, brand equity, effective marketing 

As your CFO works with you at this level to build transferable value, they will ensure that there is involvement and collaborative coordination with other key advisors involved in the process of realizing the value built.  If key advisor relationships are missing, your CFO will introduce trusted resources we have worked with in the past (e.g., brokers or M&A advisors, tax strategists, transaction attorneys, etc.).