building equity value
DESCRIPTION
Jim Henderson, Shirlaws Building The Value In Your Business As we enter a period of recovery in the economy, a trend that is likely to last for the next 18 years, it’s time for business owners to shift their mind set from survival to growth. What does growth really mean, and how can you increase the value of your business in addition to increasing profit? The Business Journey aims to act as a free, non-executive board to owner-managed businesses operating in the West of Scotland SME community.TRANSCRIPT
The Business Journey – “Building The Value in Your Business”
Jim HendersonPartner
Shirlaws (UK) Ltd
29 Club, Glasgow
Tuesday, 26th August 2014
Building Value in Your Business
• Why ?
• Why now ?
• What are the benefits ?
• How to build value ?
Why Now ? - Timing
Why Now ? - Baby Boomer Cycle
Economic Cycle: Some Dates
V = P x M
Valuation Equation
V = P x MValuation = Profit x Multiple
Valuation Equation
Profit Growth
Valuation = Profit x Multiple
e.g. 24 = 4 x 6
Profit Growth
Valuation = Profit x Multiple
e.g. 24 = 4 x 6
36 = 6 x 6 (grow income)
Asset Growth
Valuation = Profit x Multiple
24 = 4 x 6
36 = 6 x 6 (grow income)
Or
36 = 4 x 9 (build the multiple)
Or
54 = 6 x 9 (both)
Valuation Model - Assets
Above and Below The Line
Valuation Model
Summary
• What is your Multiple really?
• Have an Exit Plan – exit on full value
• Build in the skills now for sale tomorrow
• V = P x M above the line and below the line
• Key skills required in a step fashion
Future Seminars
