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What is Value Acceleration?

Business Value Acceleration

What is Value Acceleration?

By , June 8, 2024
value acc

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.

Craig West

Craig West

Executive Chairman | Succession Plus

Craig West is a strategic accountant with over 20 years of experience advising business owners. His background as a CPA in public practice has provided invaluable experience in the key issues of concern to business owners.

In March 2014, Craig was appointed Executive Chairman of the SME Association of Australia, Australia’s largest small business organisation representing over 300,000 business owners.

In October 2014, he was awarded the Exit Planner of the Year at the Exit Planning Institute Annual Conference in Texas, USA, due to his innovative development of an exit planning process to help business owners maximise business value and achieve a successful exit.

Craig’s proprietary structure - a Peak Performance Trust - has won the Australia-wide award for the Employee Share Ownership Plan of the year twice in four years.

In November 2018, Craig launched SME Experts in partnership with Mark Bouris’ Mentored on Podcast One and quickly grew the monthly podcast audience to over 26,500 downloads; in October 2019, he released a new podcast focused on medium-sized businesses - Mid-Market Matters.

In July 2021, Craig joined the NSW Committee for STEP (Society of Trust & Estate Practitioners) – focusing on advising families across generations.

Craig has also launched a SaaS platform, Capitaliz (which captures the 21-step process), to assist other advisers internationally deliver advisory services at scale.

In November 2021, Craig was appointed Executive Chairman of NSW Leaders, a business mentoring group for leading NSW businesses.

In July 2022, Craig West received the award of Doctor of Business Administration for his research thesis titled “Examination of the key factors driving business exit options in Australian Small and Medium Enterprises.”

Craig is passionate about encouraging business owners to think strategically, maximise the value of their business and achieve a successful exit.

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