How does a strong management team increase company valuation?

A company is the sum of its people. When these people work in alignment towards the right goal, magic happens. The right leadership team or the top management is responsible for this goal setting, alignment, strategy, culture, and support. People work with people. Hence a great top management team can help you attract more talent, partners, and clients to grow the organisation. However, it is critical that the top management is in sync. Great talent which is not in sync with each other hardly get any progress done.

At the senior leadership level, the impact of every decision is exponential. A good, confident decision rallying the troops in a positive profit direction, delivers a significant growth or profit outcome for the business. A bad decision, creates distrust in management, significant losses, and wasted resources. You can't underestimate the impact of weak management at top levels. Success comes from having the strongest team!

When we built our last company and were only 4 people, my partner and I set aside time every Friday to discuss who would buy us and why. We knew it started with a great idea with great execution BUT we also felt that if our company was accretive to a large company business plan, the valuation would be higher than a multiple to EBIT. And it worked. BUT it did require a solid management team that formed the foundation for future exponential growth.11 years after the close, several key team members are still with the acquiring company....

One helpful element in my experience is to ensure your management team has one or two persons who are creative and willing to share fresh perspectives and new ways of working. They help to generate new ideas and this keeps everyone else on their toes. Such persons may not always be a good fit but the added value is immeasurable.

1. Define Clear Objectives and Competencies: Establish what goals the management team is expected to achieve and which competencies are necessary for success. 2. Performance Metrics: Use quantitative measures to assess how well managers meet specific performance targets. 3. 360-Degree Feedback: Gather input from employees at all levels, peers, and higher-ups to get a comprehensive view of each manager's effectiveness. 4. Self-Assessments: Encourage managers to self-reflect on their performance and capabilities. 5. Review of Past Decisions: Analyze the outcomes of their decisions and how they've handled past challenges.

A company's values, foundation, face, and execution is the team. Its the team that makes the decision, that moves the company forward and that takes the heat when things get rough. Your core team is the core of your company, and investors know this. The people you have closest to you are the ones who will make your company, or let it break when things get hard. If investors see that you picked the right people, they are safe in knowing you will adapt to the difficult circumstances bound to be ahead in your journey.

I understand that you're emphasizing the importance of cohesion and consistency in a business team, particularly in the context of gaining the trust and attention of investors. You highlight that all key roles, from technical staff like a CTO to visual managers, need to be synchronized and work together like a dance. This unity is crucial for successful presentation and operation of a business. Each team member plays a distinct role, and together, they form a strong, effective unit capable of attracting and persuading investors.

In every pitch deck I’ve built, the second or third slide is a leadership highlight reel. The goal isn’t to showboat; it’s to give confidence to your potential investors that this leadership team is well-rounded. They want to see a mix of strategy, operations, and who’s “been there, done that” to reduce risk. How you highlight each person on the leadership team is essential and should always tie to the goal of the company and the outcomes you’re trying to drive

Address management team gaps or weaknesses to prepare for investor pitch: Hire or outsource experts to fill skill or experience gaps. Provide training or coaching to improve performance or knowledge. Seek advice or feedback from mentors, advisors, or peers. Partner or collaborate to complement capabilities or resources. Acknowledge and explain challenges or risks, and plans to overcome them.

Quantify the management team's impact on company valuation: Track key metrics like revenue growth, customer acquisition, market share, and product development. Assess employee engagement, social impact, and environmental impact. Demonstrate management's ability to create value for stakeholders. Use data-driven metrics to convince investors of management's effectiveness.

Industry Insight Risk Management Strategic Vision Empowering Leadership Open Communication Continuous Improvement Data-Driven Decisions Adaptability and Resilience Diverse Perspectives Strong Stakeholder Relationships Talent Attraction and Retention

I believe that timing is crucial when preparing to pitch to investors. Seeking investment too early can lead to significant dilution of your company's shares, which is undesirable. Conversely, delaying the search for investment could be detrimental, as it may allow competitors to gain an advantage. Therefore, it's essential to strategically plan the timing of your pitch to align with your company's optimal position for investment.