Simplified Value-Prep® is Born
My hypothesis on using business preparation and readiness to improve value was tested in several live cases as an M&A advisor. I globally observed: the more prepared a business, the more likely it would be sold for a higher value.
It is said that to be a good teacher, you need to be a good student. In 2019, after accepting an offer to create and teach my first live course for M&A Source, a national M&A Association, I researched topics extensively. What I agreed to deliver was How to Prepare a Business for Sale to Maximize Value. I designed the course with Simplified Value-Prep® as its core process for the purpose of the sale of a business to a third party. What had been percolating for years regarding value culminated in this proprietary design. The accumulation of my experiences as a business owner, turnaround executive, Family Office and M&A Advisor provided fertile ground to germinate this four-step value-prepping process known as the COACH Method™ for business readiness.
“At any time, for any reason, the business can be transferred for maximum value, regardless of choice or chance events.”
—The Tale of Mac & Murphy
After formally introducing Simplified Value-Prep® in 2019 to fellow M&A Advisors, I taught the course again in 2020. Simplified Value-Prep® is a path any business owner can easily follow. Recall our earlier metaphor in finding buried treasure? Simplified Value-Prep® is the owner’s “map” to true value. The COACH Method™ (Calculate, Orient, Adapt, CHoose) are the four steps to follow and complete. They are the actions to “dig” for true value in the right spot. In fact, the initial tasks of collecting the necessary documents for Calculating true value are easily handled by any trusted CFO, Controller or Executive Assistant. The owner is reserved for strategic analysis and decision-making.
With a Value Advisor as a guide, Simplified Value-Prep® keeps the business owner on the right path with the right information to execute their vision for the life of the business. A constant state of business readiness protects that treasure they have worked so hard to find and build.
The Theory of Readiness™ Materializes
The eureka moment to formalize my Theory of Readiness™ occurred after teaching Simplified Value-Prep® in 2020. With an offer to teach it again in May 2022, Theory of Readiness’s universal purpose came to me in the form of a novella which I wrote for business owners. The Tale of Mac & Murphy tells the story of Murphy, an unprepared business owner struggling with an unforeseen, looming business crisis. In contrast to Murphy’s dilemma, his cousin Mac’s business value is value-protected by his wisdom of preparedness, offering him options when they count most.
My Theory of Readiness™ applies to preparing any business to be in a constant state of readiness for whatever events may occur, by choice or by chance. Actionable goals build value and insulate the business, protecting long-term business wealth. Theory of Readiness™ is supported anecdotally and quantitatively. By measuring change in value over a brief period of time, an owner sees value build with the leverage of a multiple. By mitigating risks to reach a readiness state, a prepared value is further protected. That part of the process makes timing irrelevant and de-risks the negative impact of chance events. The underlying process for creating business readiness, Simplified Value-Prep®, supports the Theory of Readiness™ by identifying and quantifying the True Value of the business. The processes lead to answering the right questions required to de-risk the business and create valuable contingencies and options.
Every owner who has avoided a business crisis or catastrophe can appreciate the priceless effect of readiness protection when confronted with a chance negative event. Not only are crises emotionally draining for the entire company, but they are equally damaging when options are limited. Having peace of mind that the business is in a ready state provides decision support and confidence. It is easier to make the right decision when faced with any creative or critical situation—an acquisition, a new investment in product lines, analysis of a competitor’s offer to buy you, or when unforeseen chance events portend a crisis. That is why the most crucial decision the business owner faces in our world of growing complexity is: to Value-Prep, or not to Value-Prep? By using Simplified Value-Prep® as a tool, your business owner clients find and build true value and protect their business wealth.