Previously, we talked about transferable value: the value buyers look for and pay for when making acquisitions. That entry focused on how Value Drivers increase transferable value if they contribute to cash flow both during and after the original owner’s tenure.
Determining how to increase transferable value is the business owner’s job. However, once owners and their advisors determine which of the Value Drivers (listed below) must be strengthened, everyone in the company should be involved. By definition, business owners cannot do it alone. If they could, they wouldn’t be creating transferable value, because once they departed, the Value Drivers would disappear.
As you read through the following list, remember that it contains only “generic” Value Drivers. Depending on what your company does, it may have other factors that create and increase transferable value. Additionally, there’s no particular order to this list, except for the importance of the management team: It is management that creates, manages, and grows these essential business characteristics, which is why establishing a best-in-class management team is always the most important factor of creating transferable value.
Common Value Drivers
Let’s look at each of these Value Drivers in a bit more detail.
Creating a plan to increase transferable value in your company is your job. No one else cares nearly as much as you do, and no one else will reap as great a reward for making sure that your company has the most transferable value it can. However, executing the strategy to increase value is everyone’s job. If you don’t already have top managers and skilled advisors ready and willing to provide ideas and implement Value Drivers, we suggest that you recruit them. Today.
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