Value Enhancement

Our ratio analysis process and experienced evaluation team, will often make recommendations to clients on specific programs that improve margins, inventory turns, clean up payables, and enhance ongoing operations. Again, all with the goal of ultimately not just improving operations, but enhancing the company’s value.

How is your company performing in relation to industry norms? How are your profit margins, operating margins, and other key metrics in comparison to standards? This analysis is key because it often shines the light on areas of your operations that have not been examined in years. How often have you reviewed your purchasing department’s policies and procedures regarding RFQs? When was the last time you reviewed and updated your operational manuals? All of these are key to improving your company’s valuation.

Frequently our clients lock their key customers into long-term contracts that simply renew year after year without any analysis. It is vital to make sure that as your costs go up, so do your long-term pricing relationships, even with key accounts. Doing so as part of our strategy to enhance the value of a business allows us to add value to our clients’ businesses because even a few percentage points increase in margins can make a big difference to the value of your company.

Most business owners rarely (if ever) do a comprehensive profit margin analysis by client, market, and product line. This is vital for business value enhancement because even a slight improvement in your pricing structure in critical areas can generate significant future earnings that could be attractive to business buyers.

In order to determine how a company compares to other industry players, it is vital to do a comprehensive ratio analysis of the business. This enables our Evaluation Associates and Evaluation Managers to determine how healthy a business’s income statement and balance sheet are when compared to industry standards. Depending on the industry, we usually examine 10-12 ratios that are standard to examine a company’s financial health and determine how to add value to the business.

Our Roadmap for Enhancing Value (REV) is designed to give business owners specific strategies to pursue, enhance and improve the valuation of the company over time with the goal of going to market at some point in the future. We evaluate 12-18 metrics that are benchmarked to our valuation improvement targets. Clients are given two updates at no additional charge over a five-year window to see how their efforts are enhancing the value of the company.

Are there new markets for your existing product line(s)? Have you ever asked your clients what else you could provide them with that they need? These are important areas to review for business value enhancement because they often reveal new areas of business that you have not considered before. Our teams will get you thinking about them as we ask questions relating to new markets and products.