Do You Know How Much Your Business Is Worth? – HBR.org Daily

by | Sep 14, 2022 | Business

If you own or manage a midsize company, do you have a firm understanding of its value? Right now, at this moment? Do you know with certainty how much value you created in the past year? Can you pinpoint where in your business value is being created and where it’s declining?
If the answer to any of these questions is “no,” you could be putting the future of your company at serious risk.
Recently, one of us (Reed) advised a family-owned company that operated three distinct business units, each in a different industry. Two of the units were doing well in promising industries while the third was lagging in a declining industry where valuations were at an all-time low and unlikely to rebound. Unfortunately, instead of devoting the bulk of their time and energy to making the well-performing businesses better, management had been consumed with trying to fix the struggling business.
The damage wrought by this approach became obvious only when the company was sold. Because the three business units were in different industries, the sale involved three separate buyers. The high-performing businesses fetched about $75 million each. The struggling business — the recipient of so mu …

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