A $1.05 million value lift with no change in profit
Drawing on Succession Thinking®, the framework by Bill Withers.
About a year ago, we valued an established owner-led supply and distribution business. It came back at $8.65 million.
Since then, Adapt has worked with the owners and their leadership team on owner independence. Today the business is valued at $9.70 million. That’s $1.05 million more, a 12.15% lift.
Net operating profit after tax (NOPAT) hasn’t changed in that time. The increase came from how the business runs.
Why the value moved
A buyer pays for profit they trust will still be there when the owner steps back. If that profit leans on the owner, the buyer discounts it. Take the owner out of the middle of the business and the same profit is worth more. Our guide to increasing your business value before you step back goes deeper.
How we did it
Owner independence is the work we do. It’s good stewardship of a business, and we’ve built our own IP and technology to make it stick.
Succession Thinking®, our method, shows the owners and their team what has to change and in what order. Lumia, our platform, holds the roles, decision rights, systems and meeting rhythm in one place, so the discipline holds week to week and everyone can see the progress.
What the team built
Together with the owners, the team worked through a considerable number of the roadmap items. Every item marked done has evidence behind it.
- Governance. Board composition and guidelines, decision rights and authorities, director succession, a family council, and a review of their legal, accounting and insurance advisers.
- Systems. HR tools and templates, documented policies and procedures, and functional management.
- Sales engine. A marketing plan, a brand touchpoints review, sales collateral, an online strategy, a CRM, and sales reporting and forecasting.
- People. Potential successors identified and recruited, management development and performance management, and an ownership mindset across the team.
- Direction. A written strategic succession plan, plus clear calls on boutique versus scale and efficiency versus expansion.
Adapt supplied the method and the platform. An Adapt coach, the owners and their team did the work together.
What’s next
The business’s modelled potential value is $13.99 million. That’s another $4.29 million on the table, and the financial work hasn’t started yet.