Using a Value Assessment to Maximize Exit Value

If you are considering a liquidity event for your business, you need to understand the various factors that drive exit value. This goes further than revenue multiples or EBITDA. Companies that get bought at premiums map a growth strategy that’s aligned with their future acquirer(s).

Building this growth roadmap starts with heavy research and analysis, known as a value assessment. This article will explain why you need to conduct a value assessment to drive a higher enterprise value and what the assessment should accomplish.

Why you need to conduct a value assessment.

Your growth roadmap is only going to be as good as the analysis that goes into it. If you’re looking to maximize exit value, building and executing a business plan that aligns with your target acquirer is critical. A value creation strategy to build a more scalable company than you have today requires understanding what to change or improve in your current business model. To dissect your current gaps and opportunities and to better understand where your company’s weaknesses are today, conducting an assessment is a critical first step.

What should a value assessment accomplish?

Simply put, a value assessment should give a thorough, third-party perspective of your company, its deficiencies, and its opportunities for growth. This includes opportunities to better align the company, optimize resources, and better position it for the target buyers with a compelling vision and growth story (i.e., blueprint). It is the core foundation to any great value creation and/or exit strategy.

Having your company assessed by a third party is particularly valuable because having an outside perspective will help you see the forest beyond the trees. If you resource an internal team to do the analysis, the likelihood of bias corrupting the results or having difficulty seeing new opportunities is high.

A strong assessment will ultimately help you determine how to maximize transferable value. It should provide you a clear picture of:

  1. The health of your business in relation to the market
  2. A deep and broad view of available market opportunities
  3. Opportunities for optimization and transformation in your business that drive exit value
  4. Feedback on whether your company can execute on the growth opportunities identified
  5. A potential list of your ideal exit targets:
  1. Who are they?
  2. What are their motives?
  3. What are their stated acquisition criteria, if any?
  4. How does your company compare to these criteria?

Understanding the health of your business

There is much to learn by benchmarking your company against relevant competitors and others within your industry. The comparison allows you to understand what your company exit value might be. It also enables you to glean insights into the drivers of value for your business and what you need to change to reach the top decile, or simply climb further up the ladder.

Some questions to answer related to understanding the health of your business include:

●       What differentiates you in the market?

●       Why is your business better positioned to execute?

●       How effective is each functional area of your business?

○       (e.g., marketing, sales, operations)

●       How predictable is your revenue?

●       Can you back your revenue projections with data?

●       How mature is the business compared to the market benchmarks?

●       What areas are more (or less) mature than others?

By answering these questions, you’ll be able to diagnose problems and construct a roadmap to improve the enterprise value of your business.

Uncovering market opportunities

Research and analysis around your industry and adjacent markets can help uncover new market opportunities. This might include new products/services or go-to-market opportunities that could better position the company for a specific type of exit.

Questions include:

●       What customers and markets could your business serve and how?

●       How big are these opportunities?

●       How do they align with the company vision?

Identifying optimization and transformation opportunities

Assessing your businesses strategies, people, and processes can identify opportunities to create positive change throughout the organization. This includes the identification of smaller scale optimizations within a specific business unit.  In addition, there may be opportunities for large, transformative changes that can significantly alter the way the business operates and how it's positioned in the market.

Questions include:

●       Where areas of the business are most in need of optimization or transformation?

●       Where are we lagging the most?

●       What are the key metrics that potential acquirers are looking for?

●       Are there opportunities to improve these and by what means?

●       What is the lift of doing so?

●       Is our company positioned optimally in the market to capitalize on an acquirer’s needs?

While executives don’t always execute on all the opportunities uncovered, understanding what’s possible is valuable in and of itself.

Understanding ability to execute

Knowing what opportunities exist is one part of the puzzle. But understanding what you’re equipped to execute on is another.

The assessment should help determine your company’s ability to execute on value creation opportunities and what capabilities it may need to acquire to do so.

Questions include:

●       Can your business adapt to market opportunities?

●       What is your company capable of accomplishing with the existing team?

●       What critical capabilities and competencies may you need to acquire?

●       How rapidly can each functional area of your business match increased demand?

●   Will your technology, operational processes, and other areas support 5-10x growth?

Mapping your exit

Understanding the M&A landscape in your industry is important for understanding exit potential as well as strategy. If an exit is the goal, then an assessment should help you understand your options. The goal is to ensure that the business you build matches what they want.

Questions include

●       Who is investing in or acquiring similar businesses?

●       What valuations are similar businesses attaining?

●       Why are they investing?

●       Are they looking to defend a position or build a platform?

●       What is the risk profile of the business?


Just like any strategy, your business growth strategy (and thus, your exit value), will only be as good as the inputs to it (data, insights, analysis). Conducting a holistic value assessment will illuminate the best path to exit.