Do any of the below statements apply to you? 1. I am in the early, startup phase of building a business 2. I am trying to scale an established business 3. I am working towards an exit If you answered yes to any of the above questions, Dragon Argent ran an online webinar - Enterprise Value as a Framework for Growth. We’re sharing the presentation for business owners and management team. The webinar was hosted by James Taylor, Chief Commercial Officer and Strategy Advisor at Dragon Argent. James has previously started, scaled, and exited his own business and now advises clients at Dragon Argent on how to grow their business, avoiding some common pitfalls along the way. In the webinar, James covered: • What is Enterprise Value and why is it important? • When to start thinking about Enterprise Value • Enterprise Value as a Framework for Growth • The 3 Drivers of Enterprise Value • Realising Enterprise Value: Exits & Disposals The webinar covers a very broad range of considerations that founders and entrepreneurs have to consider when building a valuable business, from go-to-market strategy, corporate structure, accounting best practices and risk management. It will provide leaders with the ability to build simple, effective plans to increase the holistic value of their business as they grow and move towards an investment round or exit. We hope this is a valuable resource.

1. The Importance
of Enterprise Value
and How to Build it
James Taylor
Commercial Strategy Advisor & Chief Commercial Officer
Dragon Argent

2. About Dragon Argent
Dragon Argent is a boutique professional services consultancy
specialising in early stage, high growth businesses.
We have a diverse client base and are sector agnostic, but
many clients are tech enabled.
We offer joined up accountancy, advisory and legal support.
#AskDragonArgent

3. About Me
• Sales & Marketing background
• Started my own business in 2013
• Exited in 2020
• Spent 18 months at Dragon Argent building the
business and advising clients on strategy
James Taylor
Chief Commercial Officer &
Strategy Advisor, Dragon Argent

4. Introduction
When is it important to think about the value
of the business you are building?
• Want to exit from it?
• A few years out from exiting?
• When you commercialise your offering?
• When you start?
You should think about EV from the day you
incorporate your business.

5. What Factors Determine Value in a Business
When you do consider the value of your business,
what factors would you take into consideration?
Revenue? Profit? EBITDA?

6. What is Enterprise Value (EV)?
EV is a measure of a company’s total value
based on some core building blocks:
Money Corporate
Documentation
Corporate
Structure
Assets & IP People Shareholders

7. EV as a Framework for Growth
Using EV as a framework for
growth will protect you from:
And provide you with a prioritised operational plan to drive value
across your business, pulling the levers that have the biggest impact
Assumption Led Thinking Limited Scalability
Legal Risk Accounting Risk

8. So what is the answer…
Use the three stages of due diligence that an investor or
potential acquirer would use when valuing your business
Commercial due diligence
Legal due diligence
Financial due diligence

9. Painting the Picture
Private Equity investor sees a growth opportunity for a
business with:
• EBITDA over £750k
• GP 40% +
• NPM 10% +
Total Consideration: £4.12m
Below is a very simple example of what an exit
might look like for an SME

10. Section One: Commercial Due Diligence
Product-Market Fit
There are several criteria to demonstrating a
product-market fit including:
Value
Proposition
Market
Segmentation
Channel
Relationship

11. A go-to-market (GTM) strategy is the way in
which a company brings a product to market.
Commercial success is obviously a pre-requisite
Buying Centre
and Personas
Customer
Journey Mapping
Value
Matrix
Test
& Optimise
Sales
Strategies
Go-To-Market Strategy

12. Section Two: Legal Due Diligence
Legal due diligence is about understanding
and identifying risk.
• Articles of Association (bylaws of the company)
• Shareholders (shareholders agreement)
• Directors (directors service agreement)
• Employees (employee agreement)
• Suppliers & Customers (commercial agreements)
• Prospective Clients (Non-Disclosure Agreement)
• Terms and Conditions (of sale for customers)
Do the legal agreements you enter protect the value
your business is built on and mitigate risk appropriately?

13. Company Structure & Governance
Consider the structure and operations of the business
itself against future and possible eventualities. Overseas operations
Joint ventures
Diverse Trading activities
Assets & IP
Operational & Commercial Risks
• Does your company structure enable or hinder
commercial opportunities?
• Does it offer the flexibility to enter into or exit from
operations?
• Does it protect tax statuses like (S)EIS, R&D, EMI etc?
Crucial to get the company structure right at the outset

14. Legal Framework
Protecting the Value, the Business is Built On
Their control over the business
The cash reserves contained in the business
Any intellectual property belonging to the business,
such as product designs, technology, or brand
Physical assets owned by the business such as stock,
buildings or machinery
The relationships the business has with 3rd parties,
as outlined earlier

15. Section Three: Accounting Due Diligence
The final stage of due diligence is about being able to demonstrate the financial health of
your business and to ensure you have used appropriate, best practice accounting
treatments to avoid any potential risks.
Revenue
Quality
Tax
Treatment
Gross and
Net Profit Margins
General
Health

16. Tracing the Revenue
Accounting due diligence can be incredibly arduous.
It’s about proving that what you say about your
numbers is provable and defensible down to an
individual sale.
It links into the commercial due diligence as value
comes from predictability and repeatability.

17. Building an EV Plan
Those are the headline criteria to focus on when
trying to build value in a business.
Business growth/value can multiply and compound,
resulting in a potentially huge effect in any future
business sale or investment round.
Finally, in any startup or SME it is essential that the key shareholders and leaders achieve
consensus over the long-term objective of the business. Once this has been agreed, it
can be used as a point from which to reverse engineer the enterprise value required to
realise that objective.
ADDITIONAL
CONSIDERATIONS
1. Business Development
2. People
3. Delivery
4. Finance
5. Strategy

18. Dragon Argent Management Tools
Enterprise Value Diagnostic
Establish shareholder objectives, timelines and outcomes to agree a realistic strategy
towards a liquidity event.
Perform a 360-degree diagnostic to create a comprehensive analysis of the business
that identifies strengths and weaknesses to maximise enterprise value.
Analyse the financial performance of the business, highlight risk and create a plan to
maximise enterprise value.
Perform a legal health check to mitigate factors that could impact enterprise value
that due diligence by an investor or acquirer would uncover.
Perform acquirer research and run a valuation model to add external factors into the
internal analysis of the business.

19. THANK YOU
&
ANY QUESTI NS?

20. Specialist advisory, accountancy and legal support for
fast growth start-ups & SMEs
SCHEDULE A DISCOVERY CALL
www.dragonargent.com