© Copyright 2014 Milner Strategic Marketing Ltd
Establishing a winning strategy to build your company’s value
Nick MilnerMilner Strategic Marketing Ltd
27th February 2014
© Copyright 2014 Milner Strategic Marketing Ltd
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 start-ups to large plc’s
• Based at SJIC & Adastral Park• 6 employees and 12 associates
(see www.milnerltd.com/team)• Founded 2006
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Web www.milnerltd.com
© Copyright 2014 Milner Strategic Marketing Ltd
What is strategy?
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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*
N=35,138 books on Corporate Strategy (24/02/14)
*source: McKeown, M. (2012) The Strategy Book, FT Publishing
© Copyright 2014 Milner Strategic Marketing Ltd4
Strategy without execution is a daydreamExecution without strategy is a nightmare
Japanese Proverb
© Copyright 2014 Milner Strategic Marketing Ltd
Where does strategy sit in a business?
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© Copyright 2014 Milner Strategic Marketing Ltd
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
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© Copyright 2014 Milner Strategic Marketing Ltd
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”
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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© Copyright 2014 Milner Strategic Marketing Ltd
Why calculate company value?
• flotation
• trade sale• acquisition• fund raising• evaluating strategic options
• setting objectives
• remuneration• new investors• new market opportunities• new management
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© Copyright 2014 Milner Strategic Marketing Ltd
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
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The valuation range is between $45m and $65m using a variety of sources
© Copyright 2014 Milner Strategic Marketing Ltd
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 10
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Revenue (£M) 1.5 1.6 1.7 1.8 1.9 2.0 2.1
18 27.0 28.8 30.6 32.4 34.2 36.0 37.819 28.5 30.4 32.3 34.2 36.1 38.0 39.920 30.0 32.0 34.0 36.0 38.0 40.0 42.021 31.5 33.6 35.7 37.8 39.9 42.0 44.122 33.0 35.2 37.4 39.6 41.8 44.0 46.223 34.5 36.8 39.1 41.4 43.7 46.0 48.324 36.0 38.4 40.8 43.2 45.6 48.0 50.4
© Copyr i ght 2007 M i l ner Company M ar ket i ng LLP
MultipleValuation Matrix
Valuation contours
Example: £36m company valuation contour for different revenues
Company value = £18m revenue x 1.5 (market average multiple) = £27m
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© Copyright 2014 Milner Strategic Marketing Ltd
What drives revenue; what drives the multiple?
Lead stimulation• Customer targeting• Campaigns and offers• Collateral• Product demonstration• Customer programmes
• Reference programme• Cross-selling
Brand and Reputation• Market position/Strategic Fit• CXO/Leadership• Customer base/revenue quality• New services, well received• Thought leadership• Analyst awareness• Advertising/recognition
• PR• Web/digital media• Conferences, Exhibitions, Events
Revenue (£M) 1.5 1.6 1.7 1.8 1.9 2.0 2.1
18 27.0 28.8 30.6 32.4 34.2 36.0 37.819 28.5 30.4 32.3 34.2 36.1 38.0 39.920 30.0 32.0 34.0 36.0 38.0 40.0 42.021 31.5 33.6 35.7 37.8 39.9 42.0 44.122 33.0 35.2 37.4 39.6 41.8 44.0 46.223 34.5 36.8 39.1 41.4 43.7 46.0 48.324 36.0 38.4 40.8 43.2 45.6 48.0 50.4
© Copyr i ght 2007 M i l ner Company M ar ket i ng LLP
MultipleValuation Matrix
large
small
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© Copyright 2014 Milner Strategic Marketing Ltd
What drives the multiple and revenue?
Multiple
Brand and reputationPerceived quality of management team
Good market positionin the right market
III.
Lea
d st
imul
atio
na
nd c
ampa
ign
s
Rev
enue
/EB
IT
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© Copyright 2014 Milner Strategic Marketing Ltd
Business Valuation Performance Management
c. Market size, growth andvalue model
d. PriceAnalysis
e. Competitoranalysis
f. Market share
b. Market structure
I. Define market position
II. Formulate strategy and set objectives
Multiple
a. Identify target customers and
their needs
5. CXO builder programme
2. Analystprogramme
3. Thought leadership
programme6. Advertising
11. Partnerprogramme
1. PR programme
4. Web andSocial Media
8. Events9. Customerprogrammes
12. Productprogrammes
7. Collateral10. Trade
associations
Brand and reputationPerceived quality of management team
Good market positionin the right market
III.
Lea
d st
imul
atio
na
nd c
ampa
ign
s
Rev
enu
e/E
BIT
13.
Bra
nd,
logo
an
d st
yle
gui
de
IV. Performance and Budget
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Establishing a winning strategy
11. Partnerprogramme
12. Productprogrammes
10. Trade associations
Measure performance and budget
Analyse the market
Formulate the strategy
Implement marketing programmes
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© Copyright 2014 Milner Strategic Marketing Ltd
Case study: Analyse the market
Requirement
Major smartphone manufacturer (HQ Taiwan)•How will markets develop around the world?
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Solution
• Bespoke market model for smartphones and tablets
• Excel
Benefits
• Fully understand methodology
• Exactly meets requirements
• Trusted forecasts
• No conflict of interest
• Alignment
© Copyright 2014 Milner Strategic Marketing Ltd
Establishing a winning strategy - Analysis
11. Partnerprogramme
12. Productprogrammes
10. Trade associations
Measure performance and budget
Analyse the market
Formulate the strategy
Implement marketing programmes
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• Understand how the forecasts are made
• Meets specific requirements
• Trusted forecasts• Alignment on number• Data is explicit• People can use it
© Copyright 2014 Milner Strategic Marketing Ltd
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
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Solution
• Strategy workshop
• Strategy document– Numbers– Markets– Customers– Products– Partners– Competitors
Benefits
• Focus on the right deal size
• Refocussing on who we are
• Clarity of message
• Ceasing to fight the competition
© Copyright 2014 Milner Strategic Marketing Ltd
Establishing a winning strategy - Strategise
11. Partnerprogramme
12. Productprogrammes
10. Trade associations
Measure performance and budget
Analyse the market
Formulate the strategy
Implement marketing programmes
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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
© Copyright 2014 Milner Strategic Marketing Ltd
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
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Solution
• Reviewed company strategy and brand values
• Competitor identities
• Created a new logo, brand style guide and web site
Benefits
• Strengthened reputation
• Present and future cost savings
• Improved quality and consistency
• Differentiated position
© Copyright 2014 Milner Strategic Marketing Ltd
Establishing a winning strategy - Implementation
11. Partnerprogramme
12. Productprogrammes
10. Trade associations
Measure performance and budget
Analyse the market
Formulate the strategy
Implement marketing programmes
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• 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?
© Copyright 2014 Milner Strategic Marketing Ltd
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
• Implement• Measure performance• Review and repeat
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Independently facilitated to ensure objectivity - even your GP has a GP!
© Copyright 2014 Milner Strategic Marketing Ltd
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
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Solution
• Analysed and re-analysed the market for a valuable niche
• Top telco groups• Agreed strategy
and stuck to it• Built a global
brand and reputation
Benefits
Revenue
2003 $21m
2006 $34m
62% Growth
Valuation
2003 $20m (x0.95)
2006 $140m (x4.1)
600% Growth
© Copyright 2014 Milner Strategic Marketing Ltd24
For further information contact [email protected]@[email protected] [email protected]@milnerltd.com
visit www.milnerltd.com