This triangle is an important step in your company value creation
In working with business owners, we commonly find they have a future hope and desire to one day sell their company for a premium, but today are lacking the bridge or game plan as to what specific steps they need to take in order to get there. At Yosemite Associates, we have a multi-step campaign to guide them on this journey and one of the early discussion points is their “ownership decision triangle”.
How Much. When. Investment Appetite.
These are the 3 points of your personal triangle on your journey to a future, euphoric exit outcome
How Much – a mistake often made is not having a target in mind in terms of how much money you want to derive one day from selling your company. Knowing this will better enable you to determine how audacious your strategy needs to be to get you there as you think about where you are today and how large a gap you have for where you want to be. Knowing this will also help you determine your second point of the triangle, the When.
When – once you have an idea of how much you want to receive one day for your business, an equally important question is “when” you’d like to experience the exit. This goes hand in hand with how much because if the amount you want to get is large and is significantly more than your business is worth today, the time frame for exiting will have to reflect how long it might take to achieve your target valuation range.
Investment Appetite – you may very well answer the first two points of the ownership triangle but this third one is equally critical. What’s your appetite for investing money, personal time and personal energy in to your ongoing journey. Having a high valuation in mind that you want to achieve one day and having a desired time frame must also align with your personal appetite for what will be needed. If your ultimate target exit valuation is large and will require you to continue investing much of your time and energy and even meaningful investment dollars, do you have the appetite for this?
If a future euphoric exit event is on your mind, give detailed thought to your ownership decision triangle. Doing so will facilitate very healthy thinking and dialog for yourself and perhaps your partners, spouse and/or key employees. If you want help thinking through your ownership decision triangle, contact us today and we can offer helpful, actionable insights on your journey to building your company future valuation.
