Our Management Training Courses

By introducing our Management Training courses to your staff we help ease the negative effect of change on both managerial and supervisory personnel. The change in job responsibilities, the change in personnel, job duties, and the rising challenge of developing subordinates are specific goals of our learning systems courses. We are highly successful at helping Managers and Supervisors learn and adapt to the necessary skills and proper behaviors to be successful at work as well as in their personal lives.

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Management Training:
Management Training Courses - What Is Good Management Worth?

So what is the value of a good management team when it comes time to sell your business? Last week I looked at how important it was for the founder of a company to transfer critical business knowledge to his management team before he even thinks about selling. Let's assume you've done this, and it's now several years later and time to reap what you have sown.

Valuation mathematics, in its most crude form, involves an earnings multiple and something to multiply it by - maybe pre-tax earnings, free cash flow or net income. Not surprisingly, the value of good or bad management works on both of these factors.

Good management will have demonstrated a track record of above average return metrics - Gross Margin, ROS, ROI, and earnings growth being a few common indicators. The benchmark for comparison will be company history and industry norms. There is a host of public and proprietary data sources available to business owners, management teams and buyers on industry performance metrics. There is no reason not to be benchmarking your team - potential buyers will be doing this for sure.

A great team will have already helped with the earnings side of the valuation equation by driving earnings levels that are above industry norms - so you know you are not leaving too much untapped earnings potential on the table. Of course you have also set up a cash compensation and stock option scheme to reward this performance and ensure that your team is kept happy.

The valuation multiple applied to earnings is also a function, in part, of management prowess. How much of a factor? My estimate is that management alone might add at least 10% to the valuation multiple - driving a typical EBITDA multiple from, say, 4X to 4.5X.

Of course, earnings multiples try to capture a whole grab-bag of valuation issues in one swoop: basic cost of capital requirements, growth expectations, taxation, and a host of risk factors being the main ones. Good management in a target company will naturally add value in all of these areas, but mainly in the area of risk.

I have never met a buyer who wants to face the risk-laden prospect of replacing the senior managers of an acquired business - even a hint that might be needed is enough to put a chill on deal value. A good management team is simply a less risky proposition for a buyer than a poor or average one - and less risk translates into a higher multiple for your business, whatever the earnings, industry sector, or size of your company.

Taken together, above average earnings and better-than-average earnings multiples might drive a transaction price 20% to 30% higher than for similar sized companies in your industry. Now you can really go on that round-the-world cruise!

By: Cameron Turner: link

Subject: Management Training Classes