Build and Monetize Business Value

Corporate Performance Group and Waypoint Private Capital have formed a strategic partnership to help business owners build, protect, and monetize enterprise value in their business.  Enterprise value is the market value of a company based on an estimate of what a buyer would pay for the company.

Critical Business Owner Challenges

All business owners face three critical challenges:

#1 – Generating enough income while building and running their business to achieve their business and personal objectives.

#2 – Building enough value in their business to achieve their long-term personal, family, and financial goals.

#3 – Effectively monetizing the value of their business when they are ready to cash out.

Most business owners clearly understand the first challenge – but they typically do not think about the second and third challenges until they start thinking about retiring or selling their business – and that is usually too late.   To get full value for their business, owners need to begin preparing for exiting and selling long before they plan to retire or sell their business.

Business Value

While most publicly traded companies are operated with a focus on company value, as represented by stock price, most entrepreneurial and family-owned companies are not operated to maximize the company’s value.

There are four reasons why business owners should always be looking ahead in terms of building the value of their business:

#1 – Every business will be sold or liquidated while the owner is alive or after the owner dies.

#2 – On average, 75% or more of a business owner’s wealth is in their business. Since it is their most significant asset, the best way to increase their wealth is to increase the market value of their company.

#3 – Company value is the most objective way to determine how well a company is performing. It is also the best way to identify and prioritize things that could be done to improve the company’s performance.

#4 – 80% of small and mid-market companies listed for sale do not sell because most business owners have an unrealistic understanding of the market value of their business. When the price offered for their company will not meet their requirements or support their post-sale lifestyle – they decide not to sell and continue operating the company.  See #1 above.

Creating Strategic Business Wealth

Knowing how to build and monetize market value requires a specific set of skills and knowledge of current market valuations and methodologies.  It is what we do every day.

Using strategic wealth creation techniques we have learned from working with leading private equity investors, we help business owners: 

Know Value – We determine what a business is worth, and, more importantly, we help the owner understand what drives the value of their business.

We recommend that business owners get an independent valuation of their company every year so they always know what their company is worth.  Tracking enterprise value is the most objective way to determine how well a company is performing – and is also the best way to identify and prioritize action steps that should be taken to enhance the company’s performance and value.

We also recommend business owners work with an estate planner or wealth manager to determine how much wealth they need to create in their business to meet their personal and financial objectives.

Build Value – Building on Corporate Performance Group’s experience in helping hundreds of business owners build strong and sustainable companies and using techniques used by leading private equity investors, we help business owners increase the value of their company by improving financial performance and also increasing the company’s valuation multiple.

Most business owners understand that increasing revenues and profits will increase the value of their business – but many business owners don’t know that increasing a company’s valuation multiple can have an even more dramatic effect on the market value of a business.

Protect Value – A study by the Exit Planning Institute found that only 21% of business owners have succession and ownership transition plans in place.  Even if a business owner doesn’t plan to sell their business, their company may suddenly be for sale because 50% of small and mid-market company sales and liquidations are triggered by unplanned events – including death, incapacity, divorce, economic downturns, and other life events.  Unplanned ownership transitions or liquidations produce bad outcomes for business owners, their families, and their company.

We help business owners protect the value of their company by helping them develop contingency and succession plans.   These plans give the business owner a roadmap for:

  • Achieving their business and personal goals when they leave their company.
  • Ensuring their financial security
  • Ensuring the survival of their business
  • Minimizing, deferring, or eliminating capital gains, income, and estate taxes
  • Controlling how and when they exit their business 

Monetize Value – Most business owners think their business will be easy to sell when they want to sell – but getting full value when a company is sold is hard and requires specialized expertise.  80% of small and mid-market companies listed for sale do not sell – primarily because the company cannot be sold for what the owner thinks the company is worth.

With our extensive investment banking experience, we are able to help business owners maximize the value of their company when they recapitalize or sell their company.  We work with the owner to define their company’s “value proposition,” develop a recapitalization or sales strategy, and prepare marketing materials that effectively tell the company’s “story.”

Then we market the company by contacting a broad range of potential investors and buyers, including private equity firms, family offices, and strategic buyers.

Getting Started

The first thing we do with a business owner is to determine their company’s enterprise value.  We go through a short questionnaire with the owner(s) in an in-person or Zoom/Teams meeting using a sophisticated online valuation tool.  The software then benchmarks the company against a database of over 15,000 closed transactions to develop a “most likely” estimate of what a buyer would pay to acquire the company.

At the end of the meeting, we give the business owner a report that outlines the estimated market value of their company – and estimates the potential “best-case” value for the company at current revenue and profit levels.

The “Gap” between the current market value and the potential value provides an easy to understand starting place for improving the company’s performance and increasing the company’s value.

There is no charge for this initial meeting or the baseline valuation.