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Increasing Value

Where’s the Leadership?

By November 29, 2023No Comments

I recently spoke with a friend from another country. He asked,

“What the heck is going on with your Congress? This is not the US the world looked to for leadership.”

Leadership and management are an important value driver for any size business. Here are three things that can make a business valuable and more attractive to buyers.

  1. Employees like to work for people they like. Studies have shown people are more productive when they enjoy their job, and their leader is a big factor in that enjoyment. Constant articles on poor bosses shows not all leaders and managers are good.
  2. Attracting and retaining good people is a key to increased value and happy employees are often an important source of good new hires.
  3. A team with management layers greatly reduces, or eliminates, any owner dependency.

The 80-20 rule tells me that often the buyer of a (small to lower middle market) business finds the seller did more day-to-day work than he/she let on, employees and management aren’t trained as one would expect, and/or some things aren’t being done correctly (think the accounting department) or as efficiently as they could.

Fixing the above will increase the price in multiples.

“Any company that has an economist has one employee too many.” Warren Buffett