Value Leverage Plan and “Valuation”
 

Opportunity

Identify possible detractors of the company's economic value and possible opportunities to increase this value. From the analysis of the company's current situation in relation to its business model, its current economic value  (“valuation AS IS”) and possible detractors of this value, a review of the current business plan is prepared in order to contemplate the implementation of potential opportunities for improvement that can increase the value of the company. Considering the implementation of improvement opportunities as a premise, the company's “valuation” is calculated again, this time using the “TO BE” model. 

Main pains addressed by this product
 

• Companies in the process of analyzing possible total or partial sale of capital, but with a perception of low value.  

• Companies with positive financial results, but with operational risks that, when reflected in the WACC (Average Cost of Capital), raise the discount rate to values that reduce the final economic value of the company.  

• Companies with high growth rates in key revenue/margin indicators, but which cannot achieve the same growth impact on the economic value of the company.

• Companies where the performance metrics of managing executives do not necessarily meet the interests of partners/owners.

Main benefits of this product

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• Review of the company's business model in order to meet the company's value growth objectives and not just revenue and margin.

• Generating a leverage plan with more tangible metrics and goals and focused on measurable results.

• Focus on the interests of major shareholders and owners.

• Preparation for a future total or partial sale operation with greater probability and success.

Profile of companies that can benefit from this  product

• Medium and large companies, from all segments, interested in increasing the economic value of the company for future sale.

• Companies with Shareholders and/or Owners interested in tracking and monitoring not only short-term financial results metrics, but also concerned with medium/long-term value generation.

• Companies interested in knowing their current economic value and value leverage potential.

How can DMS help?

DMS Partners and its team of senior partners, from the most  different segments of industries and with solid knowledge in planning and business modeling, as well as  in the process of evaluating the economic value of companies, have the  expertise necessary to identify opportunities to leverage the economic value of companies, in order to provide them not only with a  better operational efficiency, but also that can increase its economic value.

Market Vision

A number  significant number of executives  and owners, when faced with the calculation of the economic value of their companies or even with the value offered by a potential buyer or investor, whether in a formal process of conducting a total or partial sale operation, or just as a curiosity, they feel disappointed or frustrated, as they expected a value much higher than that resulting from the calculations performed by recognized market techniques such as: Discounted Cash Flow and/or Market Multiples. 

This disappointment or frustration is often due to the fact that most executives or business owners dedicate much of their focus and attention mainly to the company's financial indicators (revenue, profit, sales volume, etc.), which is obviously important and impact the value of the company, but they forget about other variables that could be generating loss of value or perception of risk in the acquisition, from the point of view of a possible buyer or investor.  
 

The approach suggested by the Management Solution presented here aims to support company managers to identify possible detractors of the company's economic value and possible opportunities to leverage this value.