Private Business Owners think of value in many ways. Long-term market value is the true answer.

1. What is Value?
by R. Thomas Stocker
Value means different things to different public companies. They have a board of
business owners. If you ask an owner just directors and/or a board of advisors, a clear
starting up their business the answer may be succession plan, easily understood structure
revenue growth or available cash. Ask and documented processes. All of these
another who has gotten past the startup things reduce risk and provide superior
phase and it may be cash and/or profit, and enterprise value.
ask a stockholder of a public company and it
Risk is an important factor to consider when
will probably be profit. They are all correct
you think about enterprise value. All
of course, but the real value in any non-
valuation experts use a risk factor to
public company isn’t just growth, profit and
determine a company’s value. As the owner
cash. It is much more.
and/or CEO of your company, part of your
Value is not a here and now measure of how job and obligation to your owners is to
much cash the company has available or the minimize risk as much as possible. Making
profit it made last quarter. It is a long-term sure your company has adequate business
metric that is measurable and changeable. It systems, processes and structure will go a
is the most important measure of any long way toward minimizing internal risk.
company, private or public. It is a measure This is a topic in itself which I will address
of sustainability and transferability. in a future blog.
Ultimately it is how much your company
At Chairman’s View we have two
can sell for on the open market. At any
presentations we call “The Story of Value”
given time, what would someone be willing
and “Building an “A”. In both cases we talk
to pay for the enterprise as it exists today.
about the meaning of value for private
You should be aware of this value whether
companies and concentrate heavily on how
or not you are planning to sell or transfer
important sustainability and transferability
your business today, tomorrow or twenty
are to building a valuable company.
years from now. Because it is so important
to you, your strategies must start with how
Sustainability is a very important concept
to increase this value.
for making a valuable company. Outside
investors won’t pay much for a company if
For a private company, real value is
they can’t see or understand how an
sustainable and transferable profitability.
enterprise can continue to grow revenue and
For public companies, sustainable and
profitability. Likewise, they need to feel
transferable are given as the enterprise is
comfortable the business can survive
generally transparent and value is reflected
without you the owner/CEO. If you are the
in real time through the enterprise’s stock
“octopus” (see my article “Are You an
price. Private companies do not always see
Octopus?”), haven’t done anything to groom
value in this light but should consider and
a competent management team, all processes
understand the implications of avoiding or
are in peoples’ heads or are “custom” for
ignoring these two key factors. The most
each transaction or action; you don’t have a
valuable private companies generally
transferable business and are at risk of not
conduct themselves in the same manner as
10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.boardroomadvisorygroup.com

2. having a sustainable business. As a result, only one of them is right and you haven’t
there is higher risk and thus a lower talked to any or all of them? What if the
valuation than a similar business/competitor “wrong” one emerges as that successor in
that does have these internal characteristics the aftermath? If this is a family business,
in place. will this event tear apart your family?
Clearly there are many alternatives and
These concepts hold true regardless of conclusions to this story. But from a
where you are in your business lifecycle. business standpoint the ending is clear. The
The best time to be working on long-term company will be worth less and may not
value is all the time. Clearly the longer time survive because sustainability and
horizon you have before you plan to exit transferability were not addressed.
your business the more value (and less risk)
you can build. Having a lot of time It is clear to see how sustainability and
(meaning multiple years) provides the transferability are important cornerstones to
flexibility to work on this in smaller bites. all businesses. With a public company
Regardless of your timeline, a sense of sustainability and transferability is taken for
urgency should be in place to get it done as granted. It is part of the stock price of all
quickly as possible. public companies. Private companies who
can be considered “A” companies have also
Think about what would happen to your addressed these important tenets of control.
business if something were to happen to you But unfortunately, many private companies
today to remove you from the business have not and could suffer when a transfer of
suddenly and permanently. Could it control becomes necessary for whatever
survive? Is there someone in place who reason. And with the “retirement boom” of
could step in and provide the leadership to at aging baby boomer owners currently
least sustain the business? Is there someone underway, business transitions and pressure
who can provide the vision and leadership on business valuations are only going to
needed to make the business thrive? Are increase. Start getting ready now.
there multiple people (children) who think
they are that heir apparent, but you know
To comment on this or other topics important to private business owners, access my blog at
www.boardroomadvisorygroup.com.
About the author; Tom is a Principal of Boardroom Advisory Group, LLC, an owner advisory and consulting firm. Tom serves on the Board of
Directors for the RI Economic Development Corp’s Small Business Loan Fund Corporation (SBLFC), the finance arm of the RI EDC. He writes
a monthly article for the RI EDC’s Every Company Counts initiative. His articles focus on areas that can add significant value for business
owners. Contact Tom directly at 401-451-9799 or tstocker@boardroomadvisorygroup.com.
Boardroom Advisory Group, LLC is a business advisory and consulting firm specializing in helping business owners resolve day-to-day systemic
issues that interfere with cash flow and profitability attainment. The Firm works with both growing and underperforming small to mid-market
private companies. The Firm’s team of hands-on senior professionals find and implement solutions to improve top-line and bottom-line growth,
increase cash flow, reduce costs, improve process, structure, and use world-class metrics to keep the business on track. The team also has
extensive experience working with troubled companies through business restructures and recapitalization. Boardroom Advisory Group’s core
focus on developing strategies to drive and measure performance has resulted in a history of sustainable top and bottom line growth, healthy cash
flow and increased company value for their clients. For more information about how we can help you build a more valuable business visit our
website at www.boardroomadvisorygroup.com.
©2008-09 Boardroom Advisory Group, LLC All Rights Reserved. No part of this document may be reproduced without the express permission
of the author. All registered trademarks mentioned in this document are the property of their respective owners.
Additional articles written by Mr. Stocker include:
Start Forecasting Now! What is Value?
I’m Out of Compliance. Now What? Do You Have Contingency Plans?
Are you in a Foxhole? Have You Thought About Your Future Lately?
Are You an Octopus? Metrics Should Be Everywhere (Part I)

3. Metrics Should Be Everywhere (Part II) It’s All About Growth
These articles can be accessed at www.boardroomadvisorygroup.com/pages/pubs.php. You can also request to be added to his email list to
receive his latest articles on a monthly basis on the Company website. Contact Tom at tstocker@boardroomadvisorygroup.com.

4. What is Value?
by R. Thomas Stocker
Value means different things to different public companies. They have a board of
business owners. If you ask an owner just directors and/or a board of advisors, a clear
starting up their business the answer may be succession plan, easily understood structure
revenue growth or available cash. Ask and documented processes. All of these
another who has gotten past the startup things reduce risk and provide superior
phase and it may be cash and/or profit, and enterprise value.
ask a stockholder of a public company and it
Risk is an important factor to consider when
will probably be profit. They are all correct
you think about enterprise value. All
of course, but the real value in any non-
valuation experts use a risk factor to
public company isn’t just growth, profit and
determine a company’s value. As the owner
cash. It is much more.
and/or CEO of your company, part of your
Value is not a here and now measure of how job and obligation to your owners is to
much cash the company has available or the minimize risk as much as possible. Making
profit it made last quarter. It is a long-term sure your company has adequate business
metric that is measurable and changeable. It systems, processes and structure will go a
is the most important measure of any long way toward minimizing internal risk.
company, private or public. It is a measure This is a topic in itself which I will address
of sustainability and transferability. in a future blog.
Ultimately it is how much your company
At Chairman’s View we have two
can sell for on the open market. At any
presentations we call “The Story of Value”
given time, what would someone be willing
and “Building an “A”. In both cases we talk
to pay for the enterprise as it exists today.
about the meaning of value for private
You should be aware of this value whether
companies and concentrate heavily on how
or not you are planning to sell or transfer
important sustainability and transferability
your business today, tomorrow or twenty
are to building a valuable company.
years from now. Because it is so important
to you, your strategies must start with how
Sustainability is a very important concept
to increase this value.
for making a valuable company. Outside
investors won’t pay much for a company if
For a private company, real value is
they can’t see or understand how an
sustainable and transferable profitability.
enterprise can continue to grow revenue and
For public companies, sustainable and
profitability. Likewise, they need to feel
transferable are given as the enterprise is
comfortable the business can survive
generally transparent and value is reflected
without you the owner/CEO. If you are the
in real time through the enterprise’s stock
“octopus” (see my article “Are You an
price. Private companies do not always see
Octopus?”), haven’t done anything to groom
value in this light but should consider and
a competent management team, all processes
understand the implications of avoiding or
are in peoples’ heads or are “custom” for
ignoring these two key factors. The most
each transaction or action; you don’t have a
valuable private companies generally
transferable business and are at risk of not
conduct themselves in the same manner as
10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.boardroomadvisorygroup.com

5. having a sustainable business. As a result, only one of them is right and you haven’t
there is higher risk and thus a lower talked to any or all of them? What if the
valuation than a similar business/competitor “wrong” one emerges as that successor in
that does have these internal characteristics the aftermath? If this is a family business,
in place. will this event tear apart your family?
Clearly there are many alternatives and
These concepts hold true regardless of conclusions to this story. But from a
where you are in your business lifecycle. business standpoint the ending is clear. The
The best time to be working on long-term company will be worth less and may not
value is all the time. Clearly the longer time survive because sustainability and
horizon you have before you plan to exit transferability were not addressed.
your business the more value (and less risk)
you can build. Having a lot of time It is clear to see how sustainability and
(meaning multiple years) provides the transferability are important cornerstones to
flexibility to work on this in smaller bites. all businesses. With a public company
Regardless of your timeline, a sense of sustainability and transferability is taken for
urgency should be in place to get it done as granted. It is part of the stock price of all
quickly as possible. public companies. Private companies who
can be considered “A” companies have also
Think about what would happen to your addressed these important tenets of control.
business if something were to happen to you But unfortunately, many private companies
today to remove you from the business have not and could suffer when a transfer of
suddenly and permanently. Could it control becomes necessary for whatever
survive? Is there someone in place who reason. And with the “retirement boom” of
could step in and provide the leadership to at aging baby boomer owners currently
least sustain the business? Is there someone underway, business transitions and pressure
who can provide the vision and leadership on business valuations are only going to
needed to make the business thrive? Are increase. Start getting ready now.
there multiple people (children) who think
they are that heir apparent, but you know
To comment on this or other topics important to private business owners, access my blog at
www.boardroomadvisorygroup.com.
About the author; Tom is a Principal of Boardroom Advisory Group, LLC, an owner advisory and consulting firm. Tom serves on the Board of
Directors for the RI Economic Development Corp’s Small Business Loan Fund Corporation (SBLFC), the finance arm of the RI EDC. He writes
a monthly article for the RI EDC’s Every Company Counts initiative. His articles focus on areas that can add significant value for business
owners. Contact Tom directly at 401-451-9799 or tstocker@boardroomadvisorygroup.com.
Boardroom Advisory Group, LLC is a business advisory and consulting firm specializing in helping business owners resolve day-to-day systemic
issues that interfere with cash flow and profitability attainment. The Firm works with both growing and underperforming small to mid-market
private companies. The Firm’s team of hands-on senior professionals find and implement solutions to improve top-line and bottom-line growth,
increase cash flow, reduce costs, improve process, structure, and use world-class metrics to keep the business on track. The team also has
extensive experience working with troubled companies through business restructures and recapitalization. Boardroom Advisory Group’s core
focus on developing strategies to drive and measure performance has resulted in a history of sustainable top and bottom line growth, healthy cash
flow and increased company value for their clients. For more information about how we can help you build a more valuable business visit our
website at www.boardroomadvisorygroup.com.
©2008-09 Boardroom Advisory Group, LLC All Rights Reserved. No part of this document may be reproduced without the express permission
of the author. All registered trademarks mentioned in this document are the property of their respective owners.
Additional articles written by Mr. Stocker include:
Start Forecasting Now! What is Value?
I’m Out of Compliance. Now What? Do You Have Contingency Plans?
Are you in a Foxhole? Have You Thought About Your Future Lately?
Are You an Octopus? Metrics Should Be Everywhere (Part I)

6. Metrics Should Be Everywhere (Part II) It’s All About Growth
These articles can be accessed at www.boardroomadvisorygroup.com/pages/pubs.php. You can also request to be added to his email list to
receive his latest articles on a monthly basis on the Company website. Contact Tom at tstocker@boardroomadvisorygroup.com.

7. What is Value?
by R. Thomas Stocker
Value means different things to different public companies. They have a board of
business owners. If you ask an owner just directors and/or a board of advisors, a clear
starting up their business the answer may be succession plan, easily understood structure
revenue growth or available cash. Ask and documented processes. All of these
another who has gotten past the startup things reduce risk and provide superior
phase and it may be cash and/or profit, and enterprise value.
ask a stockholder of a public company and it
Risk is an important factor to consider when
will probably be profit. They are all correct
you think about enterprise value. All
of course, but the real value in any non-
valuation experts use a risk factor to
public company isn’t just growth, profit and
determine a company’s value. As the owner
cash. It is much more.
and/or CEO of your company, part of your
Value is not a here and now measure of how job and obligation to your owners is to
much cash the company has available or the minimize risk as much as possible. Making
profit it made last quarter. It is a long-term sure your company has adequate business
metric that is measurable and changeable. It systems, processes and structure will go a
is the most important measure of any long way toward minimizing internal risk.
company, private or public. It is a measure This is a topic in itself which I will address
of sustainability and transferability. in a future blog.
Ultimately it is how much your company
At Chairman’s View we have two
can sell for on the open market. At any
presentations we call “The Story of Value”
given time, what would someone be willing
and “Building an “A”. In both cases we talk
to pay for the enterprise as it exists today.
about the meaning of value for private
You should be aware of this value whether
companies and concentrate heavily on how
or not you are planning to sell or transfer
important sustainability and transferability
your business today, tomorrow or twenty
are to building a valuable company.
years from now. Because it is so important
to you, your strategies must start with how
Sustainability is a very important concept
to increase this value.
for making a valuable company. Outside
investors won’t pay much for a company if
For a private company, real value is
they can’t see or understand how an
sustainable and transferable profitability.
enterprise can continue to grow revenue and
For public companies, sustainable and
profitability. Likewise, they need to feel
transferable are given as the enterprise is
comfortable the business can survive
generally transparent and value is reflected
without you the owner/CEO. If you are the
in real time through the enterprise’s stock
“octopus” (see my article “Are You an
price. Private companies do not always see
Octopus?”), haven’t done anything to groom
value in this light but should consider and
a competent management team, all processes
understand the implications of avoiding or
are in peoples’ heads or are “custom” for
ignoring these two key factors. The most
each transaction or action; you don’t have a
valuable private companies generally
transferable business and are at risk of not
conduct themselves in the same manner as
10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.boardroomadvisorygroup.com

8. having a sustainable business. As a result, only one of them is right and you haven’t
there is higher risk and thus a lower talked to any or all of them? What if the
valuation than a similar business/competitor “wrong” one emerges as that successor in
that does have these internal characteristics the aftermath? If this is a family business,
in place. will this event tear apart your family?
Clearly there are many alternatives and
These concepts hold true regardless of conclusions to this story. But from a
where you are in your business lifecycle. business standpoint the ending is clear. The
The best time to be working on long-term company will be worth less and may not
value is all the time. Clearly the longer time survive because sustainability and
horizon you have before you plan to exit transferability were not addressed.
your business the more value (and less risk)
you can build. Having a lot of time It is clear to see how sustainability and
(meaning multiple years) provides the transferability are important cornerstones to
flexibility to work on this in smaller bites. all businesses. With a public company
Regardless of your timeline, a sense of sustainability and transferability is taken for
urgency should be in place to get it done as granted. It is part of the stock price of all
quickly as possible. public companies. Private companies who
can be considered “A” companies have also
Think about what would happen to your addressed these important tenets of control.
business if something were to happen to you But unfortunately, many private companies
today to remove you from the business have not and could suffer when a transfer of
suddenly and permanently. Could it control becomes necessary for whatever
survive? Is there someone in place who reason. And with the “retirement boom” of
could step in and provide the leadership to at aging baby boomer owners currently
least sustain the business? Is there someone underway, business transitions and pressure
who can provide the vision and leadership on business valuations are only going to
needed to make the business thrive? Are increase. Start getting ready now.
there multiple people (children) who think
they are that heir apparent, but you know
To comment on this or other topics important to private business owners, access my blog at
www.boardroomadvisorygroup.com.
About the author; Tom is a Principal of Boardroom Advisory Group, LLC, an owner advisory and consulting firm. Tom serves on the Board of
Directors for the RI Economic Development Corp’s Small Business Loan Fund Corporation (SBLFC), the finance arm of the RI EDC. He writes
a monthly article for the RI EDC’s Every Company Counts initiative. His articles focus on areas that can add significant value for business
owners. Contact Tom directly at 401-451-9799 or tstocker@boardroomadvisorygroup.com.
Boardroom Advisory Group, LLC is a business advisory and consulting firm specializing in helping business owners resolve day-to-day systemic
issues that interfere with cash flow and profitability attainment. The Firm works with both growing and underperforming small to mid-market
private companies. The Firm’s team of hands-on senior professionals find and implement solutions to improve top-line and bottom-line growth,
increase cash flow, reduce costs, improve process, structure, and use world-class metrics to keep the business on track. The team also has
extensive experience working with troubled companies through business restructures and recapitalization. Boardroom Advisory Group’s core
focus on developing strategies to drive and measure performance has resulted in a history of sustainable top and bottom line growth, healthy cash
flow and increased company value for their clients. For more information about how we can help you build a more valuable business visit our
website at www.boardroomadvisorygroup.com.
©2008-09 Boardroom Advisory Group, LLC All Rights Reserved. No part of this document may be reproduced without the express permission
of the author. All registered trademarks mentioned in this document are the property of their respective owners.
Additional articles written by Mr. Stocker include:
Start Forecasting Now! What is Value?
I’m Out of Compliance. Now What? Do You Have Contingency Plans?
Are you in a Foxhole? Have You Thought About Your Future Lately?
Are You an Octopus? Metrics Should Be Everywhere (Part I)

9. Metrics Should Be Everywhere (Part II) It’s All About Growth
These articles can be accessed at www.boardroomadvisorygroup.com/pages/pubs.php. You can also request to be added to his email list to
receive his latest articles on a monthly basis on the Company website. Contact Tom at tstocker@boardroomadvisorygroup.com.

10. What is Value?
by R. Thomas Stocker
Value means different things to different public companies. They have a board of
business owners. If you ask an owner just directors and/or a board of advisors, a clear
starting up their business the answer may be succession plan, easily understood structure
revenue growth or available cash. Ask and documented processes. All of these
another who has gotten past the startup things reduce risk and provide superior
phase and it may be cash and/or profit, and enterprise value.
ask a stockholder of a public company and it
Risk is an important factor to consider when
will probably be profit. They are all correct
you think about enterprise value. All
of course, but the real value in any non-
valuation experts use a risk factor to
public company isn’t just growth, profit and
determine a company’s value. As the owner
cash. It is much more.
and/or CEO of your company, part of your
Value is not a here and now measure of how job and obligation to your owners is to
much cash the company has available or the minimize risk as much as possible. Making
profit it made last quarter. It is a long-term sure your company has adequate business
metric that is measurable and changeable. It systems, processes and structure will go a
is the most important measure of any long way toward minimizing internal risk.
company, private or public. It is a measure This is a topic in itself which I will address
of sustainability and transferability. in a future blog.
Ultimately it is how much your company
At Chairman’s View we have two
can sell for on the open market. At any
presentations we call “The Story of Value”
given time, what would someone be willing
and “Building an “A”. In both cases we talk
to pay for the enterprise as it exists today.
about the meaning of value for private
You should be aware of this value whether
companies and concentrate heavily on how
or not you are planning to sell or transfer
important sustainability and transferability
your business today, tomorrow or twenty
are to building a valuable company.
years from now. Because it is so important
to you, your strategies must start with how
Sustainability is a very important concept
to increase this value.
for making a valuable company. Outside
investors won’t pay much for a company if
For a private company, real value is
they can’t see or understand how an
sustainable and transferable profitability.
enterprise can continue to grow revenue and
For public companies, sustainable and
profitability. Likewise, they need to feel
transferable are given as the enterprise is
comfortable the business can survive
generally transparent and value is reflected
without you the owner/CEO. If you are the
in real time through the enterprise’s stock
“octopus” (see my article “Are You an
price. Private companies do not always see
Octopus?”), haven’t done anything to groom
value in this light but should consider and
a competent management team, all processes
understand the implications of avoiding or
are in peoples’ heads or are “custom” for
ignoring these two key factors. The most
each transaction or action; you don’t have a
valuable private companies generally
transferable business and are at risk of not
conduct themselves in the same manner as
10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.boardroomadvisorygroup.com

11. having a sustainable business. As a result, only one of them is right and you haven’t
there is higher risk and thus a lower talked to any or all of them? What if the
valuation than a similar business/competitor “wrong” one emerges as that successor in
that does have these internal characteristics the aftermath? If this is a family business,
in place. will this event tear apart your family?
Clearly there are many alternatives and
These concepts hold true regardless of conclusions to this story. But from a
where you are in your business lifecycle. business standpoint the ending is clear. The
The best time to be working on long-term company will be worth less and may not
value is all the time. Clearly the longer time survive because sustainability and
horizon you have before you plan to exit transferability were not addressed.
your business the more value (and less risk)
you can build. Having a lot of time It is clear to see how sustainability and
(meaning multiple years) provides the transferability are important cornerstones to
flexibility to work on this in smaller bites. all businesses. With a public company
Regardless of your timeline, a sense of sustainability and transferability is taken for
urgency should be in place to get it done as granted. It is part of the stock price of all
quickly as possible. public companies. Private companies who
can be considered “A” companies have also
Think about what would happen to your addressed these important tenets of control.
business if something were to happen to you But unfortunately, many private companies
today to remove you from the business have not and could suffer when a transfer of
suddenly and permanently. Could it control becomes necessary for whatever
survive? Is there someone in place who reason. And with the “retirement boom” of
could step in and provide the leadership to at aging baby boomer owners currently
least sustain the business? Is there someone underway, business transitions and pressure
who can provide the vision and leadership on business valuations are only going to
needed to make the business thrive? Are increase. Start getting ready now.
there multiple people (children) who think
they are that heir apparent, but you know
To comment on this or other topics important to private business owners, access my blog at
www.boardroomadvisorygroup.com.
About the author; Tom is a Principal of Boardroom Advisory Group, LLC, an owner advisory and consulting firm. Tom serves on the Board of
Directors for the RI Economic Development Corp’s Small Business Loan Fund Corporation (SBLFC), the finance arm of the RI EDC. He writes
a monthly article for the RI EDC’s Every Company Counts initiative. His articles focus on areas that can add significant value for business
owners. Contact Tom directly at 401-451-9799 or tstocker@boardroomadvisorygroup.com.
Boardroom Advisory Group, LLC is a business advisory and consulting firm specializing in helping business owners resolve day-to-day systemic
issues that interfere with cash flow and profitability attainment. The Firm works with both growing and underperforming small to mid-market
private companies. The Firm’s team of hands-on senior professionals find and implement solutions to improve top-line and bottom-line growth,
increase cash flow, reduce costs, improve process, structure, and use world-class metrics to keep the business on track. The team also has
extensive experience working with troubled companies through business restructures and recapitalization. Boardroom Advisory Group’s core
focus on developing strategies to drive and measure performance has resulted in a history of sustainable top and bottom line growth, healthy cash
flow and increased company value for their clients. For more information about how we can help you build a more valuable business visit our
website at www.boardroomadvisorygroup.com.
©2008-09 Boardroom Advisory Group, LLC All Rights Reserved. No part of this document may be reproduced without the express permission
of the author. All registered trademarks mentioned in this document are the property of their respective owners.
Additional articles written by Mr. Stocker include:
Start Forecasting Now! What is Value?
I’m Out of Compliance. Now What? Do You Have Contingency Plans?
Are you in a Foxhole? Have You Thought About Your Future Lately?
Are You an Octopus? Metrics Should Be Everywhere (Part I)

12. Metrics Should Be Everywhere (Part II) It’s All About Growth
These articles can be accessed at www.boardroomadvisorygroup.com/pages/pubs.php. You can also request to be added to his email list to
receive his latest articles on a monthly basis on the Company website. Contact Tom at tstocker@boardroomadvisorygroup.com.

13. What is Value?
by R. Thomas Stocker
Value means different things to different public companies. They have a board of
business owners. If you ask an owner just directors and/or a board of advisors, a clear
starting up their business the answer may be succession plan, easily understood structure
revenue growth or available cash. Ask and documented processes. All of these
another who has gotten past the startup things reduce risk and provide superior
phase and it may be cash and/or profit, and enterprise value.
ask a stockholder of a public company and it
Risk is an important factor to consider when
will probably be profit. They are all correct
you think about enterprise value. All
of course, but the real value in any non-
valuation experts use a risk factor to
public company isn’t just growth, profit and
determine a company’s value. As the owner
cash. It is much more.
and/or CEO of your company, part of your
Value is not a here and now measure of how job and obligation to your owners is to
much cash the company has available or the minimize risk as much as possible. Making
profit it made last quarter. It is a long-term sure your company has adequate business
metric that is measurable and changeable. It systems, processes and structure will go a
is the most important measure of any long way toward minimizing internal risk.
company, private or public. It is a measure This is a topic in itself which I will address
of sustainability and transferability. in a future blog.
Ultimately it is how much your company
At Chairman’s View we have two
can sell for on the open market. At any
presentations we call “The Story of Value”
given time, what would someone be willing
and “Building an “A”. In both cases we talk
to pay for the enterprise as it exists today.
about the meaning of value for private
You should be aware of this value whether
companies and concentrate heavily on how
or not you are planning to sell or transfer
important sustainability and transferability
your business today, tomorrow or twenty
are to building a valuable company.
years from now. Because it is so important
to you, your strategies must start with how
Sustainability is a very important concept
to increase this value.
for making a valuable company. Outside
investors won’t pay much for a company if
For a private company, real value is
they can’t see or understand how an
sustainable and transferable profitability.
enterprise can continue to grow revenue and
For public companies, sustainable and
profitability. Likewise, they need to feel
transferable are given as the enterprise is
comfortable the business can survive
generally transparent and value is reflected
without you the owner/CEO. If you are the
in real time through the enterprise’s stock
“octopus” (see my article “Are You an
price. Private companies do not always see
Octopus?”), haven’t done anything to groom
value in this light but should consider and
a competent management team, all processes
understand the implications of avoiding or
are in peoples’ heads or are “custom” for
ignoring these two key factors. The most
each transaction or action; you don’t have a
valuable private companies generally
transferable business and are at risk of not
conduct themselves in the same manner as
10 Larkspur Road, East Greenwich, RI 02818 401-451-9799 www.boardroomadvisorygroup.com

14. having a sustainable business. As a result, only one of them is right and you haven’t
there is higher risk and thus a lower talked to any or all of them? What if the
valuation than a similar business/competitor “wrong” one emerges as that successor in
that does have these internal characteristics the aftermath? If this is a family business,
in place. will this event tear apart your family?
Clearly there are many alternatives and
These concepts hold true regardless of conclusions to this story. But from a
where you are in your business lifecycle. business standpoint the ending is clear. The
The best time to be working on long-term company will be worth less and may not
value is all the time. Clearly the longer time survive because sustainability and
horizon you have before you plan to exit transferability were not addressed.
your business the more value (and less risk)
you can build. Having a lot of time It is clear to see how sustainability and
(meaning multiple years) provides the transferability are important cornerstones to
flexibility to work on this in smaller bites. all businesses. With a public company
Regardless of your timeline, a sense of sustainability and transferability is taken for
urgency should be in place to get it done as granted. It is part of the stock price of all
quickly as possible. public companies. Private companies who
can be considered “A” companies have also
Think about what would happen to your addressed these important tenets of control.
business if something were to happen to you But unfortunately, many private companies
today to remove you from the business have not and could suffer when a transfer of
suddenly and permanently. Could it control becomes necessary for whatever
survive? Is there someone in place who reason. And with the “retirement boom” of
could step in and provide the leadership to at aging baby boomer owners currently
least sustain the business? Is there someone underway, business transitions and pressure
who can provide the vision and leadership on business valuations are only going to
needed to make the business thrive? Are increase. Start getting ready now.
there multiple people (children) who think
they are that heir apparent, but you know
To comment on this or other topics important to private business owners, access my blog at
www.boardroomadvisorygroup.com.
About the author; Tom is a Principal of Boardroom Advisory Group, LLC, an owner advisory and consulting firm. Tom serves on the Board of
Directors for the RI Economic Development Corp’s Small Business Loan Fund Corporation (SBLFC), the finance arm of the RI EDC. He writes
a monthly article for the RI EDC’s Every Company Counts initiative. His articles focus on areas that can add significant value for business
owners. Contact Tom directly at 401-451-9799 or tstocker@boardroomadvisorygroup.com.
Boardroom Advisory Group, LLC is a business advisory and consulting firm specializing in helping business owners resolve day-to-day systemic
issues that interfere with cash flow and profitability attainment. The Firm works with both growing and underperforming small to mid-market
private companies. The Firm’s team of hands-on senior professionals find and implement solutions to improve top-line and bottom-line growth,
increase cash flow, reduce costs, improve process, structure, and use world-class metrics to keep the business on track. The team also has
extensive experience working with troubled companies through business restructures and recapitalization. Boardroom Advisory Group’s core
focus on developing strategies to drive and measure performance has resulted in a history of sustainable top and bottom line growth, healthy cash
flow and increased company value for their clients. For more information about how we can help you build a more valuable business visit our
website at www.boardroomadvisorygroup.com.
©2008-09 Boardroom Advisory Group, LLC All Rights Reserved. No part of this document may be reproduced without the express permission
of the author. All registered trademarks mentioned in this document are the property of their respective owners.
Additional articles written by Mr. Stocker include:
Start Forecasting Now! What is Value?
I’m Out of Compliance. Now What? Do You Have Contingency Plans?
Are you in a Foxhole? Have You Thought About Your Future Lately?
Are You an Octopus? Metrics Should Be Everywhere (Part I)

15. Metrics Should Be Everywhere (Part II) It’s All About Growth
These articles can be accessed at www.boardroomadvisorygroup.com/pages/pubs.php. You can also request to be added to his email list to
receive his latest articles on a monthly basis on the Company website. Contact Tom at tstocker@boardroomadvisorygroup.com.