Showing posts from 2014

The Importance of Company Specific Risk (CSR) in Business Valuation

Many times through the classes I facilitate in New Orleans or through my work with Emerge Dynamics, I am asked what the drivers of a business' value are.  There are many.  However, here I describe an often overlooked, yet very important driver: Company Specific Risk.

Whether my role is as a consultant or as an investor, I work closely with the companies I align myself with to identify and methodically reduce company specific risk, thereby increasing their valuation.  As described below, a company can increase its valuation by reducing Company Specific Risk, even without growing sales or profitability by one dollar.  But here's a nice perk.  When companies identify Company Specific Risk and then develop an implementation plan to reduce it, not only does that alone increase valuation, but sales and profitability usually increase as well.  A double bonus.

I was facilitating a class this week during which the students were trying to understand the drivers of business valuation.  B…

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