How To Maximise Company Value
This video explores the link between leadership and company value and how it can be assessed in the M&A process.
One of the key reasons to build a business is to create value so it can be sold. When businesses are being sold the value of the customer base is critical to optimising company value. Most companies rely upon past financials and accountants to determine the valuation of the business and this process does not allow for the future intentions of the customer base. Today there is a lot of activity in the M&A market and there are major challenges with the valuations that are calculated.
The statistics are concerning with 1/3 of all M&A transactions failing to deliver, 1/3 have no positive impact to bottom line and share price and 1/3 achieve the results they were expecting. The challenge is often due to poor commercial due diligence and the wrong theories of measuring customer value. It’s essential to assess the revenue risk of future customer transactions and the methodology must allow for repeat business, referrals and wallet share.
Understanding what creates unshakable customer loyalty is one of the biggest assets a company can build, having the correct process to measure and increase revenue based upon customer loyalty ensures the revenue risk of a company is dramatically reduced.