8th May 2015
Expert Advice from Grant Thornton: Are you building value in your business?
In a fast-paced and ever-changing economy where management teams can be understandably preoccupied with the day to day operations of the business; consideration of the ultimate goals of the business’ shareholders and ways to strategically build business value can often be overlooked.
At Grant Thornton we like to challenge businesses to think more strategically about the approaches that will help deliver their goals and ultimately drive value for their business. In a sector as innovative and dynamic as life sciences, it is especially important to have a clear action plan geared towards maximising the value of your business.
In order to do this, businesses owners must be fully aware of what their market place considers to be value drivers as well as value detractors.
Each business is unique, and the attributes that drive its value will differ depending on a variety of factors – from the sector it operates in to the maturity of the business and the products or services offered.
Understanding how to drive value in the business is especially important if the shareholders are looking to exit the business. However, that is not to say that building true, sustainable value in a business is not important for all, as the benefits in terms of the ongoing operation and profitability of the business can be far reaching.
Listed below are a few examples of value drivers which may apply to businesses in the life science industry. It is important for management teams to consider these points, as well as any other value drivers that may apply to their business.
- Track record of profitability
- New product development
- Coherent service / product offering
- Strong management team and the ability to attract and retain talent
- Visibility of earnings and recurring revenue
- Intellectual property
- Robust business model
- Future growth prospects
- Profile and reputation
Businesses can prioritise how they allocate time and resources by thinking about which factors will have the most significant impact on the future value of the business and what changes or targets they can put in place to do so. However, as in any analysis exercise, businesses must also take weaknesses or concerns into account and consider which factors could currently or potentially detract from the value of the business.
Having identified and prioritised those factors that will have the most impact on future business value, this new level of understanding and insight should be converted into an integrated business system that the business can use to progress towards its intended goal.
At Grant Thornton, we work with dynamic businesses to build sustainable value in their business by challenging them to consider these issues.
Taking the time and making the investment to do so helps businesses across many levels – from merger and acquisitions activity and operational improvements to capital management and financial restructuring.
For any business looking for an exit route, a consideration of value drivers and detractors is imperative and a crucial part of exit planning.
Our experts can assist you in the preparation of a comprehensive disposal strategy to find the right exit route and also in delivering the best value for shareholders via and a successful and profitable disposal process.
Alistair Wardell is Head of Grant Thornton in Wales and also leads the professional advisory firm’s UK-wide Life Sciences provision from Cardiff.