Glossary of Terms

The following list outlines common terms and phrases used throughout the CoreValue Application

Account Settings: Account Settings allow a user to change their Name, Password, E-mail address, Time Zone, Notification Preferences and, if applicable, view information about your CoreValue Advisor and their Firm.

Advisor: If a company enters CoreValue through an Agency, they are typically assigned a CoreValue Advisor. This Advisor has a read-only view into any company they are assigned to. Advisors may suggest tasks and enter notes around Drivers and Tasks for the owner to see.

Advisor Annotations: CoreValue allows Advisors, at their discretion, to add notes about a driver. These blurbs do not change the driver definition, available answers or scoring methodology. Rather, like Helpful Hints, Annotations help users to think about their company as an operating asset in the context of the driver being examined. Annotations will appear as “My Advisor Says _____” in the user interface.

Agency: In terms of the application software, all companies are associated with a CoreValue Agency. That agency may be our house agency if the owner purchased directly, or it may be a professional services firm (M&A Firm, Exit Planner, Accounting Firm, MEP, etc.) that the company is working with. Advisors and Agencies may be re-associated.

Collapse & Expand Tasks: Tasks may be collapsed or expanded to show less or more detail. Expanding a task will reveal (where applicable) what the nature of the task is, whether there is a Red Flag associated with the Task, if a Custom To-Do or Task has already been generated, what the goal or best practice around the Driver is and if any user notes have been captured.

Completed (Tasks): Tasks are completed by answering lingering questions around a driver or completing a tactical project or directive. If completing a Task brings the status of the company in closer alignment with the Driver’s best practice, the Value Gap will be closed and Enterprise Value will be enhanced.

CoreValue Rating: The CoreValue Rating is an indication of how well the company aligns with the best practices. If the Company had a rating of 100, this would be in perfect alignment with the private business standards, whereas a rating of 0 would put the company in deplorable condition. The Rating is a key component of the algorithm that determines Enterprise Value and Value Gap.

CoreValue Rating Distribution: If the company were to sell today in its current state, the CoreValue Rating Distribution is an indicator of what kind of sale (and therefore what kind of return) the owner might expect.

CoreValue Rating Report: The CoreValue Rating Report communicates the company’s overall CoreValue Rating, compares Market vs. Operational Drivers, and lists individual driver scores. It also contains the CoreValue Rating Distribution which gives some indications as to what kind of sale the owner could expect if they were to sell given the current condition of the business.

Custom To-Do: When a company user is in CoreValue’s Executable Growth Plan Level, Tasks are suggested based on the answers previously provided throughout the assessment. Some Tasks prompt the user to continue answering questions about a driver, while others are more tactical/project-oriented in nature. When the task is tactical, CoreValue suggests the wording for the Task. However,CoreValue also allows for a user to create a Custom To-Do to fit the particular situation.

Dashboard: The default tab for company users. Dashboard displays high-level company information including: Assessment Status, Red Flags, Investment Transparency; Enterprise Value, Fundamentals, My To-Dos and Progress

Discover: The first level of CoreValue is called Discover. It requires setting up the company fundamentals and answering one question for each of 18 CoreValue drivers. The questions state an ideal goal (best practice) and require the user to select a response that best matches their company’s status against that standard. Outputs include the company value barometer, value gap estimate, critical drivers and the number of estimated red flags. A list of all questions asked with their corresponding answers is also provided.

Driver Goals: Driver Goals stem directly from CoreValue’s private business standards and best practices. They are the ideal condition each company should strive to achieve, relative to each driver, in order to maximize value and performance.

EBITDA: This is net profit. As part of company set up and fundamentals, companies may use the figure from the most recent fiscal year or enter in revenue on a rolling 12-month basis – the most recent 12 months for which the books have been closed. Depending on the company’s industry, revenue or EBITDA are used, in part, to determine Enterprise Value. Values should be updated quarterly, if not monthly, in the fundamentals section.

Email Address: Along with a user’s password, a valid email address is part of the CoreValue access credentials. This is also the email to which notifications are sent. A user’s email may be changed by visiting My Account. An email change notification will be generated when this occurs.

Email Notifications: Email Notification preferences may be adjusted by visiting the My Account interface. Notification may include receiving a message from CoreValue or your CoreValue Advisor, being assigned an Advisor, and/or if an Advisor creates, modifies or detest a To-Do or Task.

Enterprise Value: Enterprise value (EV) tries to measure the true worth of a business. More comprehensive than the market capitalization, it is often referred to as the takeover value – the amount of money required for an acquirer to buy a company at current market price, inclusive of cash, debt, and other items associated with a business.

EV measures the ability of the business to dependably generate revenue and profit at or above its current rate even without the current business owner(s) in charge. To determine EV, investors and buyers look “under the hood” of a business and analyze the operations or “business engine,” typically as part of a due diligence process. Enterprise Value is also an indication as to how well the company will be able to perform in the future, given its current operational and market status, and/or the owner’s ability to achieve their personal or business objectives. Thus, it is a true indication of sustainability, profitability, and ultimately transferability of the business. Enterprise Value is calculated based on an algorithm which includes industry normalized trading ranges, financial performance and the CoreValue Rating. It does not take into account any balance sheet information.

Enterprise Value Report: This report contains the company’s overall CoreValue Rating, breaks out Market and Operational Drivers and looks at individual driver scores.

Fundamentals: Assessment (Reminders):If answers to certain key Drivers or Driver components go stale, or company financials have not been updated in over a quarter, CoreValue will post reminders of such and send the appropriate users an email reminder (provided their email preferences are set accordingly).

Fundamentals: Revenue & Profit: Revenue refers to the amount of money a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the “top line” or “gross income” figure.

For the purposes of CoreValue, EBITDA is defined as Net Income or a company’s total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest taxes and other expenses.

Revenue and EBITDA can and should be updated if not monthly, then certainly quarterly, to help keep the results current.

Helpful Hints: CoreValue provides users with Hints when considering answers to questions. Some drivers are pretty straightforward and Hints aren’t necessary, while others are more complex and therefore Hints are warranted. They help users think about their company as an operating asset, in the context of the driver being examined. Although CoreValue is industry agnostic, these hints help owners realize that despite their industry and subsector, there truly is a core set of standards by which all companies should abide.

Investment Rating:

The Investment Rating indicator reflects how many CoreValue questions have been answered by the user. Thus, it’s an indication as to how open the company has made itself. All companies have the same grades after Discover and Unlock Deep-Dive Analysis, but as each company answers additional questions in the Executable Growth Plan, the grade will tick upwards towards ‘A.’

Market Drivers: Some CoreValue Drivers are more external and tend to look at the environment the business operates in; we call these Market Drivers. Collectively, with Operational Drivers, they are the CoreValue Drivers.

My To-Dos (Tasks):These are the tasks that the company is actively working on completing. My To-Dos may be scheduled and both company users and Advisors may capture tasks notes. CoreValue proposes standard language around each task, but also gives the user the ability to add custom language for tasks.

Name: The user name you associate with your account (e.g. Jane Smith). This may be modified by visiting the applicable “My Account” settings.

Operational Drivers: Some CoreValue drivers are more internal and tend to look at the environment within the business; we call these Operational Drivers. Collectively, with Market Drivers, they are the CoreValue Drivers.

Overview Reports: Overview Reports give a glimpse into the company’s integrity and value. For most Overview Reports, there is a more detailed sub-report (also found within the Reports tab). The Overview Report interface includes: Overview Data, Enterprise Value, Potential Value, Value Meter, Progress Data, Critical Drivers and Red Flags.

Password: Each user generates their own unique password. The password must confirm to our password standards. A user’s password may be changed by visiting My Account. A password change notification will be generated when this occurs.

Potential Value: To create the Value Gap, we plot Enterprise Value against that range of value created by peers (transactions of like companies of the same size and industry). The high end of that range represents the high potential value of the company. It doesn’t mean the value could not exceed this due to exemplary IP or strategic value, but it does offer a decent and valuable benchmark.

Progress Report: The Progress Report is a great way to communicate company improvement and ROI. This report measures changes in CoreValue Rating, Enterprise Value, Value Gap Closed, Market vs. Operational Drivers, Potential Value, Revenue and EBITDA.

Red Flags: Red flags represent conditions that can compromise all or part of Enterprise Value and the ability of owners to achieve their personal and/or business objectives. Red Flags also give investors, buyers and other stakeholders pause when considering the company. In Level 3, tasks will be suggested to remedy Red Flags.

Red Flags Report: Red Flags are important issues or ‘watch outs’ that can negate all the value in a company. If an owner is trying to raise capital, hit growth targets, attract stellar employees or a buyer, these are the types of issues that will bubble up during due diligence and can compromise personal or business objectives.

Reports: The Reports Tab communicates information about the company’s status, and includes Overview, CoreValue Rating, Value Driver, Enterprise Value, Value Gap, Red Flag and Progress Reports.

Revenue: The amount of money the company actually takes in during a 1 year period. As part of company set up and fundamentals, companies may use the figure from the most recent fiscal year or enter in revenue on a rolling 12-month basis – the most recent 12 months for which the books have been closed. Depending on the company’s industry, revenue or EBITDA are used, in part, to determine Enterprise Value. Values should be updated quarterly, if not monthly, in the fundamentals section.

Scoring & Rating: When we ask a company to compare itself to a driver goal or best practice, there are scores (0-10) associated with each answer. Those scores help CoreValue calculate the company’s overall rating, which is reflection of how much or how little the company is aligned with the Private Business Standards (best practices). The scores help to qualify Enterprise Value, the Value Gap and how much a Driver or Driver component is contributing towards each.

Sorting Tasks – Bang for Buck: When a company user is in CoreValue’s Executable Growth Plan Level, Tasks are suggested based on the answers applied to date throughout the Assessment. Some tasks prompt the user to continue answering questions about a driver while others are more tactical/project-oriented in nature. Tasks are designed to bring the company into closer alignment with best practices. Upon completion, the user is prompted to change the status of the company relative to the driver that prompted the initial tasks; this in turn impacts the CoreValue rating. Tasks may be sorted in a variety of ways, including Bang for the Buck. More fire crackers equate to lower hanging fruit in terms of cost, effort, disruption and time. This approach is very effective when time is of the essence, or to ease the company into developing and executing projects.

Sorting Tasks – Driver: When a company user is in CoreValue’s Executable Growth Plan Level, Tasks are suggested based on the answers applied to date throughout the Assessment. Some tasks prompt the user to continue answering questions about a driver while others are more tactical/project-oriented in nature. Tasks are designed to bring the company into closer alignment with best practices. Upon completion, the user is prompted to change the status of the company relative to the driver that prompted the initial tasks; this in turn impacts the CoreValue rating. Tasks may be sorted in a variety of ways, including by Driver Type. This would allow a user and/or their Advisor to look at the tasks associated with a specific area of the business.

Sorting Tasks - Score: When a company user is in CoreValue’s Executable Growth Plan Level, Tasks are suggested based on the answers applied to date throughout the Assessment. Some tasks prompt the user to continue answering questions about a driver while others are more tactical/project-oriented in nature. Tasks are designed to bring the company into closer alignment with best practices. Upon completion, the user is prompted to change the status of the company relative to the driver that prompted the initial tasks; this in turn impacts the CoreValue rating. Tasks may be sorted in a variety of ways, including by Driver Score (low to high). This would allow a user and/or their Advisor to focus on the various areas of the business that need the most work.

Sorting Tasks – Value Gap: When a company user is in CoreValue’s Executable Growth Plan Level, Tasks are suggested based on the answers applied to date throughout the Assessment. Some tasks prompt the user to continue answering questions about a driver while others are more tactical/project-oriented in nature. Tasks are designed to bring the company into closer alignment with best practices. Upon completion, the user is prompted to change the status of the company relative to the driver that prompted the initial tasks; this in turn impacts the CoreValue rating. Tasks may be sorted in a variety of ways, including Value Gap. This would allow a user and/or their Advisor to focus on aspects of the business, regardless of driver, that are contributing to Value Gap the most, and thus, compromising Enterprise Value the most.

Tasks: In Level 3 (Executable Growth Plan), if a company has indicated a status for one of the drivers that is not line with the best practice or standard, a Task will be suggested to remedy that condition. Sometimes the Task asks for additional related questions to be answered; others are more tactical. Unique content, notes and dates may be associated with Tasks. If scheduled, the Task is moved to the My To-Do category, and when completed, to that pertinent category. Tasks may be sorted based on a variety of filters. When completed, the status that prompted the Task to be generated will be modified, and Value Gap and Enterprise Value will be adjusted accordingly.

Unlock: Deep-Dive Analysis: Unlock: Deep-Dive Analysis is the second level of CoreValue. It entails answering and additional 78 questions around the CoreValue Drivers. This level drills down into the drivers to get a better sense of value, and reports on areas of the company that need work. The Deep-Dive level is sometimes referred to as the ‘quantification’ level.

Unlock: Executable Growth Plan: Level 3 of the CoreValue is the Executable Growth Plan. It includes an additional 143 questions around the CoreValue Drivers. This level continues to drill down into the drivers using questions designed to help substantiate company status that was previously captured in the Deep-Dive Analysis. This level is sometimes referred to as the ‘qualification’ or due-diligence level. All company outputs and reports are available at this level, in dynamic form, meaning values may be changed, tasks completed and progress tracked.

Value Gap: The Value Gap represents the difference between how much your business is worth today (Enterprise Value) and how much it could be worth (Potential Value). In other words, how much you are leaving on the table due to operation and market inadequacies. The large this gap, the less sustainable, profitable and transferable the company is likely to be.

Value Gap: Critical Drivers Report-Your Value Gap is the difference between how much the business is worth today, and how much it could potentially be worth. The potential value is a reflection of the normalized trading range for like-companies. A company can definitely be worth more than what the potential range indicates (IP, assets, strategic value) but comparing Enterprise Value against this benchmark allows us to generate a gap and give owners something to work toward closing or eliminating. Critical Drivers are those areas of the business that lack the most integrity and thus are contributing most to the gap.

Vault: If there is a question in level 2 & 3, there is a corresponding berth under each driver component to store substantiating, compelling documentation related to that driver. Documents may be added and managed from the Vault tab.

What If? Scenarios: The functionality in this tab gives Owners/CEOs the ability to have better discussion around “what-if” scenarios. In addition to displaying the client’s current Enterprise Value trajectory, this tool allows for simulations based on Margin (% of Revenue), Annual Revenue (% Growth), CoreValue Rating, and Enterprise Value.

Workbook: The Workbook contains all the drivers, driver components, respective goals and available responses for a complete CoreValue assessment. The Workbook tab allows a user to see all data points, whether or not answers have been applied, what other available answers are, and to revise status or attach pertinent documents or comments.