Definition of Private Business Value
To be valuable, a private company’s profits must be sustainable and transferable. Otherwise, the business is not attractive to new owners. If the business is not attractive to new owners, its value is limited.
Profit Sustainability Factors
Profit sustainability factors tend to be market focused and outward looking – market trends, market share, competitive advantage. Being the best manufacturer in a dying product category is not attractive to new owners.
Having observed many private businesses, we see that many of them have very limited insight on the trends in their markets and the current status of competitors. Folklore versus facts tend to underly the perspective that many companies have on the markets they operate in. This is dangerous.
Profit Transferability Factors
Profit transferability factors tend to be process focused and inward looking – to be transferable, corporate processes must be teachable and repeatable. This applies to everything from staffing to selling to manufacturing and shipping. Many private businesses do well here. Their processes are well defined and internalized.
However, we also see many businesses where that is not the case. Frequently, this is because selling relationships or other key functions of the business like product development have not been passed beyond the owners or original employees of the business. This is also dangerous.
Chairman’s View Value Driver Assessment
Boardroom Metrics Chairman’s View is a standards-based assessment of the drivers that impact an organizations profit sustainability and transferability.
Organizations are scored on their knowledge of markets and market trends, core competency, competitiveness and other sustainability factors. Internally, they are scored on how the management team functions, how well people are trained, what processes are in place for all key functions and how effective the processes are.
How well the organization performs against standards for each of these drivers is output in a simple, highly visual and useful dashboard. This dashboard makes it instantly visible what opportunities there are to improve the company’s approaches to profit sustainability and transferability.
Conducting the assessment only takes approximately 12 hours of the organization’s time.
Armed with the results, owners, partners and management teams can build targeted plans for that will increase their private businesses value.
Case Studies
- stocking and distribution company
- casting and machining company
- fashion jewelry manufacturer
- expansion joints manufacturer
- specialty trucking company
Value Dashboard
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