Appreciate Your Value
Using a predictive analytics engine blending financial and non-financial data, the TEVO Score quantifies the opportunity gap between a company’s current and potential value. TEVO is the only standardized way to provide the market value for private companies using a multiple as an indication of what an owner can potentially sell the business for today.
The strength and reliability of the numbers
The sales and profits of a business tend to attract the most attention, but the quality of the earnings is what really matters. For businesses in low margin industries or where revenues exceed $25 million, trends, metrics and management are generally more important to improving the TEVO Score. Introducing a few simple measures can make a significant difference. To high margin or smaller enterprises, the “Financial Analysis” is still important, but other categories are just as valuable.
Business Systems and Processes:
Infrastructure and the ability to deliver
For services businesses or those with tangible intellectual property, “Business Systems and Processes” become particularly critical to business success. From contracts and legal issues to the quality of the information technology and the building itself, these aspects of the business are key to positively impacting the TEVO Score.
The diversification of customers and sales force
Although business owners don’t typically focus a great deal on business basics like customer and channel concentration, market share and vendor status, “Base Business” is often the first place to look to increase the multiple. By improving factors such as how revenue is generated to the structure of the client base and the supply chain in between, business owners can significantly improve their TEVO Score.
Growth, margin, integration and expansion
“Financial Analysis” measures what has already happened while “Opportunities” looks at where a business is going. It’s an area that’s very important to people viewing the company from the outside, but often not a priority for the business owner. Nonetheless, companies with expansive, scalable, expandable products or services will achieve better TEVO Scores than those for whom these components are lacking or weak.
Reliance on the owner and overall strength of the leadership
Once companies grow to more than 50 employees or more than $10 million in sales, the management team and succession plan become especially important. Regardless of company size, a reduced reliance on the owner and a clear path for creating a layered management structure is required to score well in this area.
I’ve had my business for eight years, and it was time for me to find a way to score myself against my peers and understand what my company is worth. I’ve had valuations done before and it was a magic art where they come and tell me the value of my company. They weren’t based on anything really. The TEVO Score gives me a transparent data-driven business valuation. It gave me the ability to understand and improve the health of my business. Understanding the levers better gave me the energy to go out and think bigger.