Entrepreneurs Should Always Think Value

I read an article recently written on the public stock market, “Value? Growth? Both!”  This article prompted me to use it for this newsletter. While most and maybe all of you are business owners of closely-held companies, the subject is applicable to all, both private and public, closely-held companies.

The answer to the title is Both! Growth means increases in revenues, which is a major component that goes into establishing the value of a company. Value is based on several components and is a process that professional valuators go through in order to establish what companies should be valued for the following reasons:

  • Estate taxes
  • Buying a business
  • Selling a business
  • Shareholder buyouts
  • Various other reasons

Business owners should run their businesses with a focus on building shareholder value and be familiar with the key derivers in their business that build value. As mentioned earlier, there are several components that build value and valuators use to establish values of companies, there are many professional valuators and you should consider tying up with one – earlier rather than later.