Assay’s Equity Acceleration Plan
Assay’s latest (and improved) version of its pre-exit consulting product is being launched this month.
The Equity Acceleration Plan is still based on the formula used by most acquirers and investors when valuing a business:
Valuation = Profit x Multiple (“V = P x M”)
Rather just focusing on profitability Assay assists clients in maximising “M” in the above formula and therefore, by extension, enhancing “V”.
Every industry has a multiple – an industry norm – a benchmark from which to compare one company against another. There will be some companies that achieve higher multiples than others and some companies that are best and worst performers.
Assay’s research across a variety of sectors demonstrates that investors will discount the normal multiple in a sector for Business Risks which exist in the target acquisition but will pay a premium above the norm for any Growth Accelerators which exist in in the business. Focusing on items left of the Norm minimises any discount from the industry multiple norm.
Focusing on items right of the Norm increases equity value by identifying, building and crystalising the Growth Accelerators in the business.
For ease of analysis Assay have divided all aspects of a business into 10 main categories, 5 Business risks and 5 Growth Accelerators. However, within each main heading there are 15-20 sub categories (i.e. 150-200 in total), which the Assay process analyses to help design an effective strategy to enhance equity valuation.
The new methodology also includes an interactive dashboard which allows clients to see how (and by how much) mitigating Risks or properly exploiting the Growth Accelerators in their business can improve the valuation.