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Value Driver # 3: Your Management / Operational Team
Jul 07, 2021
Value Driver # 3: Your Management / Operational Team
We recently had conversations with two business owners contemplating selling their companies. Both of them are in the value-added distribution space and have no products of their own.
Both companies were owned by married couples that put most of their effort into building and growing the company. While preoccupied with growing their companies, neither set of owners sought to hire a management team capable of running the company without them. Over the last few years, both companies have remained profitable, but stagnant in growth. .
Our suggestion was that their hard work made them good money, but the lack of infrastructure would hurt them in the selling process.
I referred them to a quote from an industry insider about what matters to the buyer in a sale.
“You don't want to hear this. You might even be a little offended. But when it comes time to sell your business, you are the least valuable part of the equation. Unless you're sticking around with an ownership stake or long-term employment contract, your experience means very little to a buyer; What does matter? The quality management team you're leaving behind.”
The CHV team advised that they delay selling and establish a strong day-to-day system of operation first. Doing this will ultimately increase their value when they do decided to sell.
Need advice on establishing a strong management team at your Company? Click Here & Contact us today at CHV Group!
Need advice on establishing a strong management team at your Company? Click Here & Contact us today at CHV Group!
According to a McKinsey study, companies that combine creativity, analytics, and purpose are growing at twice the rate of companies that only use one or two of those factors. While creativity has been used in marketing for years, data analytics have also become an integral part of successful business campaigns. Now entering the fold is the concept of “purpose”. Purpose is a new addition that can represent the overall mission of the company or product. One of the key takeaways from this study shows that “In the period 2018–19, companies using just one of the capabilities—either creativity, analytics, or purpose—saw an average growth rate of more than 6 percent. Adding a second component saw growth rates climb to more than 7 percent. For those that employed the full triple play, growth rates climbed to more than 12 percent.” Contact the Team at CHV Group if you would like to learn more about how to incorporate the concepts of creativity, analytics & purpose into your organization! If you would like to read the full McKinsey study referenced above, click here!
We recently had conversations with two business owners contemplating selling their companies. Both of them are in the value-added distribution space and have no products of their own. Both companies were owned by married couples that put most of their effort into building and growing the company. While preoccupied with growing their companies, neither set of owners sought to hire a management team capable of running the company without them. Over the last few years, both companies have remained profitable, but stagnant in growth. . Our suggestion was that their hard work made them good money, but the lack of infrastructure would hurt them in the selling process. I referred them to a quote from an industry insider about what matters to the buyer in a sale. “You don't want to hear this. You might even be a little offended. But when it comes time to sell your business, you are the least valuable part of the equation. Unless you're sticking around with an ownership stake or long-term employment contract, your experience means very little to a buyer; What does matter? The quality management team you're leaving behind.” The CHV team advised that they delay selling and establish a strong day-to-day system of operation first. Doing this will ultimately increase their value when they do decided to sell. Need advice on establishing a strong management team at your Company? Click Here & Contact us today at CHV Group!
