Last week, Middle Market Executive published an article I wrote entitled Knowing Your Financial Metrics Can Increase Your Company’s Value to Buyers (and Make It Easier to Manage Along the Way).
While I won’t repeat the whole article here, I wanted to draw your attention to a couple of key points.
First, while many middle market owners may feel comfortable managing their companies by “gut feel,” buyers expect and want more. Inevitably, buyers (whether financial or strategic) will feel compelled to slice and dice your financials into easy to consume pieces that will enable them to better understand how your company makes money.
Second, despite the fact that many companies manage by intuition, often the are asking the wrong questions and missing opportunities for growth. As an analogy, see Brad Pitt’s movie, Moneyball. If you’ve seen it, you’ll know that the Oakland A’s hired a creative GM who started asking new questions about how to succeed in baseball, and reached the playoffs with the small market A’s, much to the baseball establishment’s surprise. (Now, most of baseball uses the analyses that the A’s GM implemented.)
Finally, some useful metrics are relatively easy to implement. Rethinking the way a company Measures performance by customer, revenue category, project, and salesperson can lead to significant improvements (and will excite potential buyers’ analysts).
For more details, please take a look at the full article.