Mirus Capital AdvisorsMirus Capital Advisors

Strategic Advisory, Industrial Manufacturing, Technology, Software

Achieving an Exceptional Multiple in the Sale of Your Company – Part 2

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Previously I blogged of the combination of multiple elements and a few absolutely critical factors that must combine at the right time to create a “perfect storm” in the market for your company to achieve an exceptional valuation in the market.  We highlighted two distinct areas that we call internal and external valuation drivers. Today I would like to talk about the Internal Valuation Drivers.
Valuation-Drivers-Graph_Internal

 

Internal value drivers include elements that you can impact directly, either through planning or operations.  They include your chosen market, your external relationships, operational performance, intellectual property, customer base and pipeline, domain expertise, and your current results as manifested in growth.  Together these elements represent the fundamentals of your company and how well it has been run.  Individually each element has value; together, like building blocks, they create synergy which can lead to significant multiples in excess of industry norms.   The following are what investors are looking for in each element:

  • Market Size and Growth Characteristics – Large (>$B) , Double Digit Growth, Dynamic
  • Strategic Relationships – Improved market presence, Demand, Potential stalking horses
  • Scalability –  Platform for growth Technologically, Financially and Staffing
  • Intellectual Property – Documented, Proven, True emerging technology
  • Customer References – Lighthouse accounts, Market acceptance, Limited concentration
  • Domain Expertise – True experts
  • Exceptional and Predictable Growth – Above industry averages, Potential for growth, Distribution constrained

By understanding and doing what you can to leverage each element you build a strong foundation for your exit plan and position yourself to take advantage of the external drivers.  Internal valuation drivers can help you move the needle toward the high end of normal, but it is the external drivers that are the multipliers in the equation.  For more detail on internal drivers and how to impact them operationally, please feel free to download our white paper on Achieving an Exceptional Multiple in the Sale of Your Company.

To see how and why the external valuation drivers act as multipliers of the deal and what you can do leverage these elements watch this space for my next blog installment.