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The Biggest Driver of Your Company’s Valuation

This is the 3rd of a 6-part series on Amplifying Company Valuation.

In our first article on increasing a company’s valuation, we reviewed how taking some key actions can significantly increase the return you receive when selling your business. In our second article we discussed that the 1st step is to choose the type of buyer you would want to purchase your company, as this will influence the type of actions you take.

In this article we are going to discuss the most important way you can increase your company’s valuation, and this action is to drive growth. A moderate increase in growth can have an exponential impact on what a buyer would be willing to pay for your company.

Let’s look at a real-life example. If revenue increases 25% and fixed costs are maintained, not only could it double profits for many companies, it could also double what someone would be willing to pay for the company. If you believe you can achieve 25% growth over a 2-to-3-year period, it could also be possible to have a much larger increase in your company’s value.

While there can be many ways to drive growth, it begins by making a clear choice and rallying everyone around the new direction. Regardless if your strategy involves pursuing a new market segment, launching a game-changing product, or simply restructuring your sales and marketing processes, there is great power in providing clear focus and backing that focus with energy and momentum.

At Anavo Growth Partners, we use the following formula to evaluate the strength of strategies. Feel free to leverage this formula as you make your choices as well.

In the next article in our 6-part series on amplifying valuation, we will discuss how to make your company the “shiny penny” that draws the attention of potential buyers. You can also find additional articles on our blog page or reach out to us to learn more.

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