#25 How to Maximise your Company's Valuation

ESG performance can have a huge impact on the price investors or acquirers are willing to pay for your company — I've seen it first-hand during my time as an M&A adviser. 

Read on to discover how you can maximise your valuation ahead of an exit.

2 min read

Edition #24 explored the surprising relationship between a company's ESG score and its valuation.

Deloitte research found that every 10-point improvement (on a 100-point scale) results in a 1.8x uplift to EV multiples.

The example in that edition illustrated how a 30-point increase in ESG score could result in a company's valuation doubling.

Why does ESG performance command such a premium — and how can you use it to your advantage ahead of an exit?

A Proxy for Sustained Success

A company that is able to balance the needs of all its stakeholders is likely to be more resilient and more successful.

And in essence, that is what ESG is about.

Happy staff, loyal customers, supportive suppliers, and staying on the right side of the regulators — these are the building blocks of a high-performing company.

It's a big reason why investors and potential acquirers place such a high value on ESG performance.

And even better?

When sustainability and social impact aren't just a ‘nice to have’ — but are baked in to the business model.

This is where purpose and profit become inextricably linked, driving both impact and financial performance.

Getting the Best Results

So what do you need to do to benefit from this pricing premium ahead of an exit?

The answer is obvious, but often overlooked...

You need to start early.

Ideally, 12-18 months before an exit.

It can take 6-9 months to embed the changes needed to improve ESG sufficiently and ensure it is linked to financial performance.

And then you want to have this reflected in your numbers for at least 6 months before launching an exit process.

It does take time and effort — but the payback is huge.

Exit on the Horizon?

The difference between an average deal and an amazing outcome often comes down to preparation — and knowing what really moves the needle.

If you’re considering an exit in the next 12-24 months, message me “Exit” — the sooner you start, the more value you can unlock.

The journey towards a better way of doing business

We are on the cusp of a new paradigm of responsible business, and helping impactful companies pair purpose with profit will accelerate the shift.

I believe this holds the key to solving many of our greatest challenges and inspiring positive change throughout society.

If you can think of one or two others that would find this newsletter helpful, please invite them to join at this link.

Thanks for your support.