I designed this helpful tool while at the investment banking firm. The Filter is great for consistently evaluating decisions and works well in scripting your senior team on the dynamics you, as the CEO must constantly weigh. You will hear me talk about it because it is valuable.
Valuation: How will this decision impact my company’s valuation? Do I understand the drivers of my company’s value? Am I strategically focused on enhancing those value drivers? Do I have a sense for valuations in my industry? Who are my potential acquirers? What are their operating metrics? Are there” intangible” (patents, brand value, strategic relationships etc.) value drivers that I need to protect, promote and preserve? Is my Company more valuable today that 6 months ago?
Capital Access: How will this decision impact my access to capital? Will I be more or less financeable as a result of this decision? Am I working with the most efficient financing source? What is my backup financing plan? Do I know other financing sources? Do they know me? My company? Is my company more attractive or less attractive to financing sources? Do I weigh the impact on future financings when we consider other non-financing initiatives? What about bank covenants? Key ratio trends? How does my Company compare operationally with others in my industry peer group?
Transition: How will this decision impact my transition plan? What is my/our “transition plan” in terms of selling and realizing transferable value for my company? Am I grooming my management team? Will my company operate well without me? Do my choices affect both valuation and capital access? Who are the appropriate acquirers? Is an ESOP buyout an option? Strategic or financial buyer? What will we look like 10 years, 20 years from now? Are we attracting, developing and retaining the caliber of people who will play critically into our future transition?