So, how can you boost the valuation of your business -- whether you're a VAR, managed services provider (MSP) or CSP (cloud services provider)? Revenue Rocket offered these five recommendations during Ingram Micro Cloud Summit today in Arizona.
The five valuation boosters are:
- Historical and projected financial stability
- Depth of ONE vertical market and domain expertise
- Solid organic growth strategy
- Capable functional leaders
- Intellectual property
Valuation: ChannelE2E's Spin
My reaction? While I certainly see value in those five pointers (pun intended), I always come back to these four valuation factors:
- What's your EBITDA -- the actual dollars and cents?
- What's your EBITDA -- the actual profit margins?
- How fast is your actual EBITDA (in dollars and cents) growing?
- How fast is your EBITDA profit margin growing?
Experts, pundits and bloggers (myself included) sometimes throw too many metrics and KPIs (key performance indicators) your way. Further complicating matters, we occasionally spend too much time hyping company vision, leadership, etc.
But the proof is in the numbers -- particularly the profits, along with their upward or downward momentum. Buyers will always (hmmm... almost always) pay a premium for a proven track record of execution on the profit front.
For more on valuations, check out ChannelE2E Podcast 059 with Service Leadership Inc. CEO Paul Dippell or jump over to this detailed blog on MSP and VAR valuations. Or, just search the word valuation on ChannelE2E.