What is Value Acceleration?

Value acceleration is a strategic approach that focuses on increasing the equity value of a business. It involves identifying and enhancing the key drivers of business value, such as financial performance, operational efficiency, and market positioning. By improving these areas, business owners can significantly increase the valuation of their business, making it more attractive to buyers, investors, and lenders.

For example, implementing technology to improve financial data analysis can lead to better decision-making and increased profitability. Introducing a Customer Relationship Management (CRM) system and a digital marketing strategy can enhance customer engagement and sales, contributing to strategic growth. Additionally, establishing a corporate governance structure with an independent director and board reporting can reduce risk factors, thereby increasing the business’s valuation.

Another example is Smith Engineering (the name has been changed), which was initially valued at $5.31 million. Through dynamic revaluation, which considered improvements in non-financial scorecards, such as implementing a corporate governance structure, the business’s value potential rose to $9.05 million. This demonstrates how targeted improvements can lead to a significant increase in valuation, over time with dedicated focus and guidance.

Business owners can also focus on de-risking their business by having clear shareholders’ agreements, buy-sell agreements, funding arrangements, and insurance in place. Engaging in strategic planning that includes a clear understanding of business value drivers and market environment, as well as profitability analysis, can help set realistic and achievable growth targets.

Succession planning is another critical aspect that can add value to a business by ensuring continuity and stability if there’s a transition in leadership or ownership on the horizon. Introducing employee incentives, such as Employee Share Ownership Plans (ESOPs), can motivate employees by providing a pathway for ownership and rewards for collective and individual contributions, further enhancing the business’s value, including reducing the risk of key employees leaving the business.

Our Capitaliz software dashboard includes Dynamic Revaluation, a new feature that constantly revalues a business based on changes in economic or industry factors, financial performance, and non-financial metrics. This approach ensures accurate and up-to-date valuations and shows progress towards closing the value gap that can keep owners, advisers and others in your team accountable for measurable valuation improvements.

In summary, value acceleration is about taking proactive steps to identify and improve the areas that significantly impact a business’s valuation. By focusing on these areas, business owners can work towards closing any profit gaps and improving their valuation for a more prosperous future. If you need further assistance or specific strategies, feel free to ask here.

Dr Craig West

Founder & Chairman | Succession Plus

Dr Craig West is a strategic accountant who has over 20 years of experience advising business owners.

With a background as an accountant in practice and two master’s degrees, Craig formed a strong view that the majority of business owners (and often their advisers) were unprepared and unaware of the steps required to prepare for exit. He then designed and documented a unique 21-Step Business Succession and Exit Planning process to assist owners and their advisers in navigating this process.

Craig now acts as a strategic business and financial mentor for mid-market business owners. Craig has written four critically acclaimed books educating business owners on employee incentives, succession planning, asset protection, and exit strategies. Additionally, he has completed doctoral research on Employee Share Ownership Plans (ESOPs) for succession.

Craig is a Member of the Forbes Business Council where he leverages his extensive experience to contribute valuable insights on helping business leaders navigate the complexities of growing and exiting their businesses.

In April 2024, the Exit Planning Institute admitted Craig to the International Exit Planning Circle of Excellence.