Why a Valuation Gap Exists?
A valuation gap arises when a business owner wants to sell their company for more money than a buyer is willing to pay. One of the main causes of a valuation gap is business owners disagree a gap exists. Why? Because it’s their baby, their life’s work… so much blood, sweat equity and sacrifice have gone into 20-, 30-plus years.
What we’ve learned in 3-plus decades is unmet expectations often lead to resentment and disappointing results regarding the business’ value. This lack of knowledge and a misunderstanding of the diligence process can be disheartening. As such, too many business owners fail to make any effort or invest any resources in bridging the gap even though it’s costing them millions!
VGA is a tool to evaluate the difference between your business’s current valuation and your desired valuation. We give you everything you need to command a premium valuation provided you and your team do the work. If you’re seriously considering selling your life’s work, then doesn’t it make sense to fully understand why your value is short, how to better prepare and what to do about it? Finally, if you’re interested in JSP executing the roadmap on your behalf, then let’s discuss your expectations and our requirements to bridge your gap.
Step 1
Valuation assessment
Step 2
Value Drivers & risk factors
Step 3
the roadmap
Ongoing Coaching
One of the best ways to bridge this gap well before you get to LOI is to have a deep understanding of the buyer’s expectations before the deal. This insight allows you, the owner, to implement several strategies to boost the company’s value so it meets or exceeds those expectations. You can employ it immediately or shelve this plan for future use. Some elements include:
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- What’s Working & What’s Not Working Financially & Operationally
- Compare the Current State with the Desired State
- Summary of Actionable Value Drivers & Negative Risk Factors
- Potential Buyer & Investor Profiles
- Recommended Marketing Strategy & Marketability Factors
Based on your unique situation and your specific valuation, our team develops a list of over fifty value drivers to accelerate your value and minimize risk factors that can adversely affect your sale. Understanding the recommended Priority One™ initiatives will have the fastest and greatest immediate impact on your value. Some examples include:
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- Customer Concentration Value & Minimizing Risk
- Annual Recurring Revenue & Contracted Revenue
- Product & Service Rationalization
- Distribution Rationalization
- Regulatory Compliance & Risk Management
- Financial Risk Monitoring
Demonstrating a clear path to close the valuation gap is a strong selling point in building your business case, improve negotiations and deal structures to deliver a premium sale. We provide a detailed summary creating a plan to bridge your gap. Whether you immediately implement the strategic value drivers and mitigate potential risk factors or table this blueprint for later, you’ll favorably influence and impact your value. Your roadmap may include:
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- Compare your company’s strategy to your competitors. Adopt the top-performing aspects of competitors’ approaches and integrate specific aspects within the most successful parts of your existing strategy.
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- Insights into areas needing improvement, such as efficiency, products, profitability, processes, performance, customer satisfaction and competitive advantage
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- Set performance metric benchmarks and KPIs in monitoring progress towards closing the gap – monitor and make the right thing the right thing.
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- Strategic focus on overall planning, organization and execution at each level within your business.
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- Bridge the gap between the current & potential market size & why you’re not achieving the full potential.
You’re tired of someone always saying, “Pay me,” or always having a hand out for any REAL information. That’s why our analyses is a transparent one-time flat fee. We’ll gladly coach you through the work you need to perform – whether you need a pat on the back or a kick in the ass. It’s all included with the #1 goal to get you the highest price possible for your life’s work.*
Services:
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- Monthly coaching conversations
- Unlimited email support
- QBR – Quarterly Business Review
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*Limited time ongoing coaching offer for clients willing to secure JSP as their business case advisor.
The Guarantee
While our VGA is incredibly valuable, we’re not going to say we have all the answers or gap analyses are perfect. We guarantee our effort and dedication to work for you. Only you can guarantee your success – it’s up to you to put in the work. Some challenges you will face include:
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- Successful completion depends on your knowledge and persistence of your people involved in the process.
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- Our process will expose root causes & you must go deep enough so the proposed resolutions address the real root cause or you’ll miss the complexities behind them.
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- Fluid analysis as your ground may be steadily shifting in larger organizations or in fast-moving industries
“We all must suffer one of two things: the pain of discipline or the pain of regret.” – Jim Rohn
