You have built a very valuable business over your career, and it has helped provide an amazing lifestyle for you and your family. Whether you want to continue growing your business or are thinking about selling the business and retiring or maybe just slowly transitioning out of working in the business, this falls into our Value Acceleration Methodology™ (think exit planning on steroids). The Value Acceleration Methodology™ is a process that helps business owners develop a firm understanding of what their business is worth and ways to rapidly increase the value of the business for either continuing to grow or selling the business.
If you are like 75% of your peers, likely, you don’t actually have an exit plan in place. You probably have an idea of what you want to do but have never gone through the process of formally putting one together. The problem with this is that without developing an actual exit plan for you and your business, you run the risk of:
You probably have a large portion of your net worth tied to the value of your business, and if you’re like most business owners, you probably don’t know what your business is actually worth. What we find on average is that 80%-90% of a business owner’s wealth is usually trapped inside their business, which poses major planning issues.
The first step of the Value Acceleration Methodology™ is called the triggering event, which is both a business valuation and a personal financial plan. By working on both the business valuation and your personal financial plan, we can determine your Wealth Gap, Profit Gap, and Value Gap.
Your Wealth Gap is the amount of money you need to support your personal financial goals minus your Net Worth minus the business value. This is important to know because this helps us determine the minimum amount of money the business needs to sell for to sustain your financial goals. Depending on how big the Wealth Gap is (coupled with the Value Gap) and the timeframe, it can help us determine if we need to develop a savings and investment strategy or if we need to focus on increasing the value of the business to reach that goal.
The Profit Gap and Value Gap are ways for us to determine the business valuation’s potential growth and what your business could potentially be worth if you, as the owner, want to increase the valuation.
The Profit Gap is your business’s EBITDA compared to both your industry’s average EBITDA and Best-in-Class EBITDA.
The Value Gap is your business’s valuation multiple based on your EBITDA compared to the multiple you would receive if you had either the Average or Best-in-Class EBITDA
Your business valuation isn’t static and is constantly changing based on the financial strength of your business and the capital markets. The Value Acceleration Methodology ™ is a system designed to maximize the value of your business to continue growing or prepare it for sale. The beauty of this process is that good exit planning is just a good business strategy and can and should be implemented very early in your business’s life. You can continue with the Value Acceleration until you are ready to sell, whether that’s 1 year from now or 20 years. We put you in the driver’s seat!
Getting started with your own exit strategy is simple with Thayer Financial. Schedule a 20 minutes phone call with us to learn more.