"The harvesting of hard-earned exisiting company value demands aggressive maximization"
"Value Realization" is the preparation for, and execution of a liquidity event or ownership exit via the sale of stock or assets, whether in whole or part, at a value determined by the marketplace based on the process methodologies designed to maximize such value, and using prevalent valuation and return practices.
The purpose of a liquidity event may pertain to a desire for retirement, wealth diversification, the optimization of timing, etc. The spectrum of Value Realization alternatives has become diverse, and entails the sale of a minority interest (< 50% ownership), a majority interest (> 50% ownership), or an outright interest (100% ownership).
Strategic buyers, and given the development of the private equity industry, financial buyers, are collectively the liquidity event counterparties. While the return analysis applied by strategic and financial buyers is different, both groups typically employ cash flow (vs. asset-based) valuation methods to profitable companies.
The execution of a liquidity event will usually encompass: 1) a "Value Audit" and a resulting Corporate Agenda, 2) confirmed valuation and transaction structure expectations, 3) the production of a Confidential Information Memorandum, 4) the surgical assembly of candidate buyers or partners, and 5) transaction execution functions.
If the answer is "yes" to any of the following questions, consideration toward further investigating Value Realization activities, or the planning and execution of a liquidity event, is warranted.
• Should you develop an understanding or expectation about your company's worth or "transaction value"?
• Does interest exist in gaining a greater familiarity regarding various liquidity event alternatives?
• Has a strategic or financial buyer ever inquired, or approached you about selling or partnering?
• Have you thought about diversifying or harvesting some of your wealth, with or without continuing control?
• Have you thought about the timing or form of an exit, a succession plan, and/or your retirement?
The successful engagement of Value Realization activities, inclusive of executing a liquidity event, requires specialized expertise, experience and databases, and the utilization of corporate engineering and investment banking capabilities. Some of the essential competencies are outlined below, and these are segmented between the elements of "Art" (assessment & recommendations), and "Science" (implementation & execution).