Creating Above-market Value – What?

I was recently asked by an associate for a more complete meaning of Creating Above-market Value – my tag line. Despite my catchy elevator message of “Helping owners and CEO’s prepare their company to negotiate from a strong value position when considering an offer or additional investment in the company.” I realized from their blank expression that I was not reaching my audience. My true audience was not just owners and CEO’s planning to exit, or preparing to attract additional investment capital but all businesses that seek a valued position in their market that is above others.

Why do I believe this is an important concept to communicate?
I have participated in turning businesses around, preparing a company for a high value sale, and personally, with my partner, the sale of my own company. In each of those experiences the fundamental goal was to create a business that was differentiated from others in the market place by the way they were led, the effectiveness of the processes, the accuracy of the metrics and the adaptability of the financial system as a tool to manage the business. The buyer of our company described us as a step above the others in the marketplace which, in their minds, justified the above-market value that they establised for our company.

What is Market Value?
Market value can be expressed in at least three of the following ways:

We generally think of market value of a company in terms of market cap or stock price. This is one measure of a company’s value in terms of what someone is prepared to purchase either one share of all of the shares of the company. Financial value may also be the measure of the annual dividends (annual return on shareholder investment) that shareholders receive for investing in the company. 

On the other hand we also value companies in terms of who we like to do business with because of the “value” (or brand value) they offer us as purchasers of their goods and services. The “value” gives us a benefit, an advantage, an exceptional experience at a reasonable price and a long-term relationship should the product require after sale support. In this case “value” is not expressed in financial terms but in how we, as customers, value the use of their product or service in our daily lives.

A company does not provide consistent exceptional financial or market value without employees of the company experiencing a personal value designing, producing, marketing, selling, and servicing the products and the customers that they serve. This value is not what they see in their paycheck but the association they enjoy being part of an organization that has a leading market position – a valued position – and the prestige they earn through hard work and diligence developing and sustaining that position.

What is Above-market Value?
Above-market value is not only a financial value, or a recognized market leading position and not just having a quality relationship with its employees. It is the sum total of all of these “value” factors. Creating above-market value does not happen over night and not by accident. It is the result of an intentional and purposeful strategy that combines quality leadership, process management, effective feedback tools to deal with the unexpected, and organizing their financial’s to effectively manage the business.

While owners or CEO’s trying to sell their companies are probably the ones most likely to resonate with the above-market value concept it is a concept that all businesses can relate to. A company effective in achieving an above-market value position whether they are on the verge of a sale or not, will have successfully developed their leadership, competitive processes, effective feedback systems and organized financial’s to manage their business at a high level of performance.

My passion is working with owners, CEO’s and leadership teams on how they can incorporate a “Creating Above-market Value” philosophy and practices into their daily business process. I hope this expanded explanation was helpful to you. Pass this onto someone you know who could benefit from using this approach in their business.

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