Knowing the difference can mean millions of dollars one day to you
When you look to sell your business one day, the acquirer will look at several factors in deciding what dollar amount and what deal structure to offer you. One such factor will be what your company’s future growth trajectory is. And for this, it’s not the “what” they will focus on, it’s the “how”.
In reading many strategic plans over the years, a common issue arises. The plans include the numbers, such as the revenue, margins and cash flow targets that are desired and these are the “what”. But the key ingredient too often missing is the “how”. How will the What be achieved.
You may very well have a business with a bright growth trajectory remaining for an acquirer to enjoy. But you don’t want to just show them a hockey stick shaped financial projection without the specifics of how your team will deliver the results. What markets you can expand into, what new products or services you could add for existing or new customers or specific changes you could make in your product or service fulfilment model that could greatly enhance your margins. The What without the How is rather meaningless in the eyes of most acquirers.
Look at the strategic plan you currently have your team working. Is it equally rich with the What and the How? If yes, great. If not, now is the time to address this so you use time as a friend in your planning. And if your answer is no, let’s get addressing this now so you don’t miss out on meaningful valuation dollars and an attractive deal structure one day. Your future euphoric exit is out there…with the right planning it can be a reality and not a pipe dream.
