Why Your Financials Only Tell 20% of the Story
Most business owners look at their P&L statement to guess what their company is worth.
That is a mistake.
Data from the Exit Planning Institute shows that nearly 80% of a company’s enterprise value lives in four intangible capitals:
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Human Capital: Your people and their talent.
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Customer Capital: The strength and loyalty of your client relationships.
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Social Capital: Your workplace culture, brand reputation, and core values.
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Structural Capital: Your documented systems, tech, and processes.
In the United States, small businesses make up 99.9% of all private employers. Yet half fail within five years. Many survivors run into a wall when the owner tries to step away.
Why? Because past earnings do not guarantee future performance. Buyers do not pay for what you did yesterday. They pay for future cash flow that can continue without you.
Check Your Numbers:
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Business Attractiveness: An index scoring below 50% signals high risk and a discounted sale price. A score above 72% marks a best-in-class company.
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Exit Readiness: Evaluates over 120 questions across your personal, financial, and business life to see if you can step away cleanly.
Build a business that can run smoothly when you take a vacation. When you do that, you build real wealth.
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Watch: Learn how buyers value private companies on my YouTube Channel.
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Connect: Join our weekly M&A discussions on LinkedIn.
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Readiness: Review your business value at Transworld Business Advisors.
Michael Shea represents the Tampa Florida Transworld office. In business since 2005, he has established a reputation as a trusted business broker across Florida’s key markets- from Tampa to Orlando, Melbourne, and more. Over the past two decades, Michael and his team have closed over $1 Billion in sold business volume and presided over more than 476 transactions. His credentials include the IBBA Certified Business Intermediary®, and most recently, the prestigious Certified Exit Planning Advisor® (CEPA) credential. He is also a Florida Licensed Real Estate Broker and Business Brokers of Florida Board Certified Intermediary . Shea is a member of the VRMA and a recognized expert in property management and vacation rental management business sales