Establishing a winning strategy to build your company's value 140227 Milner Masterclass program at St John's Innovation Centre1. 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
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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
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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
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4. Strategy without execution is a daydream
Execution without strategy is a nightmare
Japanese Proverb
© Copyright 2014 Milner Strategic Marketing Ltd
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6. Overview: Establishing a winning strategy
to build your company’s value
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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
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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?
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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
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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
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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
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11. Valuation contours
Company value = £18m revenue x 1.5 (market average multiple) = £27m
Valuation Matrix
Multiple
Revenue (£M)
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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
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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)
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19
20
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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
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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
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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
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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
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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
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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
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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
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Numbers
Markets
Customers
Products
Partners
Competitors
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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
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12. Product
11.
associations
programme
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programmes
Measure
performance
and budget
© Copyright 2014 Milner Strategic Marketing Ltd
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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
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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
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22. How do you develop a winning strategy?
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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
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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
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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
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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
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