The most important person NOT on your Board – your Investor

19.8.2020

Every business owner has an opinion on the value of what they have created. The basis for this valuation can vary wildly; from independent valuations done by an accountant, to asset value, to listed trading multiples or reported transactions multiples as comparisons, all the way to what you’ve heard through word of mouth, “Joe sold his business for a multiple of five times”. However, the opinion that is rarely at the front of mind of the owner, and all that matters at the end of the day, is the value that an investor is prepared to pay.

Similarly, when Shareholders, Executives and Boards gather to set the direction for the future of their business, questions commonly asked may be:

  • What size / scale are we looking to achieve?
  • What markets should we be in, stay in, or enter?
  • Should we expand our product offering?
  • How do we increase our revenue / margin / profit? 

While these are all good questions, the question that is not asked enough is, what are future investors going to value?

If you plan to sell your business in the future, or raise capital to grow (whether equity or debt), it is important to think about your business from a potential investor’s perspective:

  • What are investors in businesses like us looking for?
  • How will they value our business?
  • What parts of the business are more / less attractive to a potential investor?
  • What risks in the business reduce our valuation?
  • What growth opportunities increase our valuation, and how do we get credit for these?
  • What is our timeframe, and how does this align with the timing of an investor?

We see a lot of founders building their business without an exit strategy or a thought for who may eventually acquire the business. Not only may this limit the pool of potential investors and increase the risk profile of the business, but the future value of the business may be eroded significantly.

While not always the easiest thing to do when focused on the day to day of running of the business, examining value through an investor’s lens can provide a more objective view and help shape your strategy. In the long term, this will help you to maximise the value for your business, and the likelihood you can exit on favorable terms. In the short term, instilling best practice will likely create value for the existing stakeholders as well.

So the next time your leadership get together to plan the future, make sure you ask yourself; what is an investor looking for in a business like this? And if you want to know how to answer that question, ask InterFinancial about their Strategic Options Analysis Process.

31.3.2025

Sector dashboards March 2025

Our monthly sector dashboards are out! Our dashboards look at the valuation multiples across seven key sectors, each made up of a number of subsectors. The data takes into account the sale prices of similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the […]

Read more
Solar panels and wind turbines in the middle of a field
31.3.2025

Towards net zero: Four key considerations for organisations on a decarbonisation journey

Strong geo-political, social and economic forces are influencing the pace of global investment in decarbonisation. Driven by economic factors, the Trump administration’s stance to curb action on climate change stands at one end of the decarbonisation investment approach, whereas other countries in Europe and Asia Pacific (including Australia) recognise they are behind in their quest […]

Read more
31.3.2025

Building an M&A dream team – What you need to know

As the old saying goes, there’s no I in team. But there is an M&A!  One of the most crucial factors determining the success (or otherwise) of a business sale or acquisition is selecting the right team. Transactions are hard work and typically involve a set of skills that are unfamiliar to a business owner. […]

Read more
31.3.2025

Employee Q&A: Brad Shaw

From mining sites to boardrooms, Brad’s career has spanned various industries, continents and more air miles than he can count. As InterFinancial’s CEO, he’s led multiple businesses through growth, change, and the curveballs – always with a strategic eye on what’s next.   With his 25+ years of experience, Brad has seen what works (and what […]

Read more
Businessman putting money on stack of coins with tree on top of it
26.2.2025

Is your business investment ready? How to raise enterprise value from an investor’s lens.

Working ON your business is just as important as working IN your business.   For many business owners, their business is their primary asset. But like with any asset, it requires regular maintenance to ensure it remains competitive, profitable, and most importantly, investment ready.   It’s important to consider the following key questions towards becoming investor ready:  […]

Read more
26.2.2025

Sector dashboards February 2025

Our monthly sector dashboards are out! Our dashboards look at the valuation multiples across seven key sectors, each made up of a number of subsectors. The data takes into account the sale prices of similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the […]

Read more
29.1.2025

Sector dashboards January 2025

Our monthly sector dashboards are out! Our dashboards look at the valuation multiples across seven key sectors, each made up of a number of subsectors. The data takes into account the sale prices of similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the […]

Read more
29.1.2025

Done deal? Why many Mergers and Acquisitions miss the mark

Mergers and Acquisitions (M&A) are often seen as a golden ticket for businesses aiming to expand, achieve economies of scale, or diversify. Yet business history is littered with stories of failed acquisitions that have eroded value rather than enhanced it. Look no further than Catch.com, which is still in the news cycle. Why? Below are […]

Read more
29.1.2025

Employee Q&A: Lucy Clarke

We’re excited to dive into a round of Q&A with Lucy Clarke, a talented and passionate M&A Associate at InterFinancial. In this post, Lucy shares her insights on the daily grind, the rewarding aspects of her role, and the challenges she overcomes. Join us as we explore what it’s like to be an M&A professional […]

Read more