Growing Revenues Doesn't Equal Growing Value

Posted by George Sandmann on Mar 12, 2021 6:15:00 AM

Shareholder equity value is the ultimate measure of business success. What are you doing to drive maximum equity value for your clients?

Next week’s Growth Consulting Summit spans the client journey from ‘why’ clients hire consultants to strategic growth planning, project execution, and designing a company that can successfully approach an M&A sale. Plus a marketing clinic for professional service firms like yours.

The Summit capstone is being delivered by Michael Poole of PCE Companies based in Winter Park, Florida. PCE provides M&A intermediary services to middle market businesses, and is representative of the high quality I-Banks who are using CoreValue. 

Michael’s presentation at the last conference is still being requested today, almost 18 months later: you don't want to miss it. Like each of the sessions, he’ll share wisdom that you can immediately apply in your client engagements. Michael’s capstone builds on John Leonetti’s discussion earlier in the day about value growth planning - John literally wrote the book on Exit/Equity Planning, and together he and I created the Growth Planning curriculum introduced to the market last year. 

What Michael and John are experts at delivering is ‘Predictable Equity Value,’ which is the third of the 3 Dimensions of Business Growth. If we boil Predictable Equity Value down, it might be defined as a company which can: 

  1. Credibly demonstrate a history of profitable growth, which
  2. Creates high confidence it can predictably generate future profitable cash flow, 
  3. With projected future revenue growth at or above the market’s rate. 

Growing, valuable, monetizable companies don’t just happen: they are designed, built, and run around the track like a winning race car. This is what the Summit is all about. Each Summit session builds from the ‘Welcome’ and works its way through Analyze, Prioritize, and Execute, capturing John’s expertise about designing the race car, and ending with Michael’s session about driving hard for the win.

growing revenues

What does this look like in practice? By working with you during a long-term engagement, the client business has moved from their status-quo to become a winner: a business with Predictable Profits and Cash Flow. In turn, predictable cash is fueling growth - and the client has achieved Predictable Profit Growth. Now this growth needs to be connected with the equity value of the business. Most business owners assume the connection is automatic, but it’s not - and you'll learn why. Let’s use one of the 18 Growth and Equity Value Drivers as an example: we’ll use Growth Driver #1, Growth in Market.

Simply growing revenues and profits doesn't grow equity value - to connect performance to equity value, you’ll need to prove to the M&A market that the ‘Growth’ Growth Driver is strong. Strong, meaning that each of the Growth Driver’s supporting Objectives are met, with Key Results in place and documented. In short, you can prove your client is growing faster than the market and can predict that growth will continue above the market’s rate. The following charts detail this process. 

Chart 1: Growth Drivers are made up of Driver Objectives, in turn consisting of Key Results. 

Chart 2: For example, in ‘Growth’ a key Objective is documenting Company Growth; there are 5 Key Results such as creating a Competitor Revenue Chart  which need to be achieved in order to connect the client’s business achievements with their equity value.

Growth Consulting, Strategic Planning


Are you up for learning new skills that you can apply immediately in your engagements? The Growth Consulting Summit is a gathering of top professionals, with community leaders sharing their ‘A’ game tips and techniques. There are limited seats left, grab yours now.

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You can check out the details and register for the Growth Consulting Summit here. Remember current customers use code CORE and save.

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Topics: Business Valuation; Operational Performance, Growth Consulting

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