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Establishing a winning strategy to build your company's value 140227 Milner Masterclass program at St John's Innovation Centre

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If you want to increase the value of a company there are strategic choices to be made. It's not just about increasing in sales. It's often more important to focus on 'increasing the multiplier'. Milner has developed a methodology to enable companies to make these choices and it has proven to be successful.
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  • 1. Establishing a winning strategy to build your company’s value Nick Milner Milner Strategic Marketing Ltd 27th February 2014 © Copyright 2014 Milner Strategic Marketing Ltd
  • 2. Company Overview • • • • • • Milner Strategic Marketing Ltd is a business consultancy Clients want help with market analysis, strategy and marketing programmes Clients are high tech, clean tech and bio tech and range in size from venture backed startups to large plc’s Based at SJIC & Adastral Park 6 employees and 12 associates (see www.milnerltd.com/team) Founded 2006 © Copyright 2014 Milner Strategic Marketing Ltd Web www.milnerltd.com 2
  • 3. What is strategy? N=35,138 books on Corporate Strategy (24/02/14) *source: McKeown, M. (2012) The Strategy Book, FT Publishing First used in Athens (508 BC) to describe the art of leadership used by the generals on the war council. From “strategos” (Greek), meaning general* © Copyright 2014 Milner Strategic Marketing Ltd 3
  • 4. Strategy without execution is a daydream Execution without strategy is a nightmare Japanese Proverb © Copyright 2014 Milner Strategic Marketing Ltd 4
  • 5. Where does strategy sit in a business? © Copyright 2014 Milner Strategic Marketing Ltd 5
  • 6. Overview: Establishing a winning strategy to build your company’s value • • • • Company value Valuation contours What drives company value? Which value drivers come from strategy, which value drivers come from execution? • Case studies • Developing and establishing winning strategies © Copyright 2014 Milner Strategic Marketing Ltd 6
  • 7. Let’s start with company valuation Quoted Company • Share price x shares • Driven by evidence and belief about the future earnings (profits) of the company • Disclosure • Analysts working to value listed companies • “…that is already factored into the share price” © Copyright 2014 Milner Strategic Marketing Ltd Private Company • No share price • Calculated using evidence and belief about the future earnings of the company • Why calculate value? • How to calculate value? 7
  • 8. Why calculate company value? • flotation • trade sale • acquisition • fund raising • evaluating strategic options • setting objectives • remuneration • new investors • new market opportunities • new management © Copyright 2014 Milner Strategic Marketing Ltd 9
  • 9. Methods to calculate company value • Discounted Cash Flow (DCF) • BDO company multiples • FTSE sector values • acquisition multiples • EBITDA multiples • revenue multiples • number/growth in customers • Other sources of evidence © Copyright 2014 Milner Strategic Marketing Ltd The valuation range is between $45m and $65m using a variety of sources 9
  • 10. Sources of evidence Sources •Business Plan •Historic revenue growth profile •Order book or sales pipeline •Customers and contract length •Customer Satisfaction/loyalty •Quality/morale of staff •Products/Services/R&D •Market size and growth •Market share •Brand and Reputation •Competitor analysis/ Competitiveness •Track record of the leadership •Press coverage (amount/tone) •3rd Party (Journalists, Analysts, TA’s) •Market average/recent transactions © Copyright 2014 Milner Strategic Marketing Ltd 10
  • 11. Valuation contours Company value = £18m revenue x 1.5 (market average multiple) = £27m Valuation Matrix Multiple Revenue (£M) 18 19 20 21 22 23 24 1.5 27.0 28.5 30.0 31.5 33.0 34.5 36.0 1.6 28.8 30.4 32.0 33.6 35.2 36.8 38.4 1.7 30.6 32.3 34.0 35.7 37.4 39.1 40.8 1.8 32.4 34.2 36.0 37.8 39.6 41.4 43.2 1.9 34.2 36.1 38.0 39.9 41.8 43.7 45.6 2.0 36.0 38.0 40.0 42.0 44.0 46.0 48.0 2.1 37.8 39.9 42.0 44.1 46.2 48.3 50.4 © Copy r i ght 2007 M i l ner Company M ar k et i ng LLP Example: £36m company valuation contour for different revenues © Copyright 2014 Milner Strategic Marketing Ltd 12
  • 12. What drives revenue; what drives the multiple? • PR • Web/digital media • Conferences, Exhibitions, Events large small Lead stimulation • Customer targeting • Campaigns and offers • Collateral • Product demonstration • Customer programmes • Reference programme • Cross-selling © Copyright 2014 Milner Strategic Marketing Ltd Brand and Reputation • Market position/Strategic Fit • CXO/Leadership • Customer base/revenue quality • New services, well received • Thought leadership • Analyst awareness • Advertising/recognition Valuation Matrix Multiple Revenue (£M) 18 19 20 21 22 23 24 1.5 27.0 28.5 30.0 31.5 33.0 34.5 36.0 © Copy r i ght 2007 M i l ner Company M ar k et i ng LLP 13 1.6 28.8 30.4 32.0 33.6 35.2 36.8 38.4 1.7 30.6 32.3 34.0 35.7 37.4 39.1 40.8 1.8 32.4 34.2 36.0 37.8 39.6 41.4 43.2 1.9 34.2 36.1 38.0 39.9 41.8 43.7 45.6 2.0 36.0 38.0 40.0 42.0 44.0 46.0 48.0 2.1 37.8 39.9 42.0 44.1 46.2 48.3 50.4
  • 13. Good market position in the right market Perceived quality of management team Brand and reputation Multiple © Copyright 2014 Milner Strategic Marketing Ltd 14 Revenue/EBIT III. Lead stimulation and campaigns What drives the multiple and revenue?
  • 14. Business Valuation Performance Management d. Price Analysis e. Competitor analysis f. Market share I. Define market position II. Formulate strategy and set objectives 1. PR programme 2. Analyst programme 3. Thought leadership programme 4. Web and Social Media 5. CXO builder programme 6. Advertising 7. Collateral 8. Events 9. Customer programmes 10. Trade associations 11. Partner programme 12. Product programmes Good market position in the right market Perceived quality of management team Brand and reputation Multiple © Copyright 2014 Milner Strategic Marketing Ltd 15 IV. Performance and Budget Revenue/EBIT c. Market size, growth and value model III. Lead stimulation and campaigns b. Market structure 13. Brand, logo and style guide a. Identify target customers and their needs
  • 15. Establishing a winning strategy Analyse the market Formulate the strategy ImplementTrade marketing Partner programmes 10. 12. Product 11. associations programme programmes Measure performance and budget © Copyright 2014 Milner Strategic Marketing Ltd 15
  • 16. Case study: Analyse the market Requirement Major smartphone manufacturer (HQ Taiwan) •How will markets develop around the world? © Copyright 2014 Milner Strategic Marketing Ltd Solution Benefits • Bespoke market • Fully understand model for methodology smartphones • Exactly meets and tablets requirements • Excel • Trusted forecasts • No conflict of interest • Alignment 16
  • 17. Establishing a winning strategy - Analysis • Understand how the forecasts are made • Meets specific requirements • Trusted forecasts • Alignment on number • Data is explicit • People can use it Analyse the market Formulate the strategy ImplementTrade marketing Partner programmes 10. 12. Product 11. associations programme programmes Measure performance and budget © Copyright 2014 Milner Strategic Marketing Ltd 17
  • 18. Case study: Formulate the strategy Requirement 10 years old, Pasteur Institute spin-out (HQ Paris) •Strategy review for international growth •Review, re-group, refine then assign resources © Copyright 2014 Milner Strategic Marketing Ltd Solution • Strategy workshop • Strategy document – – – – – – Numbers Markets Customers Products Partners Competitors 18 • • • • Benefits Focus on the right deal size Refocussing on who we are Clarity of message Ceasing to fight the competition
  • 19. Establishing a winning strategy - Strategise Analyse the market Formulate the strategy ImplementTrade marketing Partner programmes 10. 12. Product 11. associations programme • • • • • • • • programmes Measure performance and budget © Copyright 2014 Milner Strategic Marketing Ltd 19 Who are we? What are the resources? What are the objectives? What are the risks? What are the options? Evaluate the options Now – decide Clarity of message
  • 20. Case study: Implement programmes Requirement Software company, with blue chip clients was growing, wanted to increase visibility but knew the visual identity reflected badly on the company and would impact on revenues © Copyright 2014 Milner Strategic Marketing Ltd Solution • Reviewed company strategy and brand values • Competitor identities • Created a new logo, brand style guide and web site 20 • • • • Benefits Strengthened reputation Present and future cost savings Improved quality and consistency Differentiated position
  • 21. Establishing a winning strategy - Implementation Analyse the market Formulate the strategy ImplementTrade marketing Partner programmes 10. 12. Product 11. associations programme programmes • What needs to be done? • What needs to be done first? • Who is best to do it? • Who is going to do it? • How do we measure it? Measure performance and budget © Copyright 2014 Milner Strategic Marketing Ltd 21
  • 22. How do you develop a winning strategy? • • • • • • • Involve all key people Use the best data Be systematic Confront inconsistencies Ensure completeness Write up strategy Simplify to help communication Independently facilitated to ensure • Implement objectivity - even your GP has a • Measure performance GP! • Review and repeat © Copyright 2014 Milner Strategic Marketing Ltd 22
  • 23. Case study: the whole process Requirement 3 parts of BT were combined into a single unit to be “spun-out” •Needed to be made into a real company •Needed identity and leadership © Copyright 2014 Milner Strategic Marketing Ltd • • • • Solution Analysed and reanalysed the market for a valuable niche Top telco groups Agreed strategy and stuck to it Built a global brand and reputation 23 Benefits Revenue 2003 $21m 2006 $34m 62% Growth Valuation 2003 $20m (x0.95) 2006 $140m (x4.1) 600% Growth
  • 24. For further information contact jonathan.davenport@milnerltd.com david.jenkins@milnerltd.com nick.milner@milnerltd.com chloe.purcell@milnerltd.com kay.sharpington@milnerltd.com visit www.milnerltd.com © Copyright 2014 Milner Strategic Marketing Ltd 24
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