Communicating Business Value

"The question was whether we were still the best owners of this business. Maybe it was worth more to someone else?"

Business is an eternal balancing of risk, returns and investment. Families need a robust methodology for business valuation that does not diminish the importance of family’s emotional connection.
“As a second generation family we identified with FINH, that whilst family members did work in the business, the Next Generation were not committed to the responsibilities of on-going management and ownership. It was FINH’s clear communication that allowed us to better understand value with the business held in our hands versus the value if sold to a strategic buyer. In conjunction with our accountants and lawyers, we proceeded with a sale to a strategic buyer. We achieved an outcome far beyond our initial expectation. The new owner had exciting plans that offered our staff better long-term career opportunities. Before, without understanding succession in this context (Family capability/aspirations and financial value across different scenarios) we were likely to make some poor financial decisions and importantly those decisions were likely to negatively impact on our family relationships. I am very confident that this kind of decision-making process, if known by us at the time, would have enhanced our success over previous years.” Managing Director of a software development and distribution company.

Being able to understand and communicate business valuation is always a healthy mix of art and science. A methodology that incorporates all of the facts within a commercial framework is paramount to making better investment decisions.

David Harland
Executive Chairman, FINH

Striving for a higher business valuation is important for a growing and diversified family group. The succession from local to global operations is a competitive windfall for healthy, well-capitalised family businesses. A realistic business’ valuation helps families make informed, responsible decisions about their capital allocation.