Why EBITDA Margin Determines Exit Multiples

Nick shares his past struggles as a CEO being overwhelmed by too many metrics, which led to poor decision-making and a difficult board meeting. He argues that most CEOs drown in "vanity metrics" that don't actually reflect a business' true value. 

To combat this, he introduces The Ultimate CEO Dashboard, detailing the five most crucial numbers that private equity operating partners consistently demand and that truly determine a business' enterprise value and potential for a premium exit

KEY TAKEAWAYS

• Stop tracking dozens of "vanity metrics" and focus only on the five crucial numbers that determine if your business is building or destroying value.
• Private Equity values the ability to accurately forecast revenue (pipeline coverage) and profitability (EBITDA margin) more than just raw revenue growth. Wildly inaccurate forecasts, even if positive, can be penalised.
• Cash runway is the oxygen of your business, which must be tracked weekly. However, EBITDA growth (profit) is the metric that determines your exit multiple and creates real financial value.
• Customer concentration (when a few clients drive a large percentage of revenue) is the number one silent deal killer and can instantly drop a business's valuation by 30% to 50%.

BEST MOMENTS

"The board partner at the time said, 'Nick, I don't care about your NPS score, your net promoter score. He said, do we have cash or not?'"

"More metrics can sometimes mean worse decisions."

"You can't cost-cut your way to a premium exit. You need growth plus margin expansion."

"If you're only looking at revenue, you're driving by looking in the rearview mirror."

VALUABLE RESOURCES

Want a one-pager that breaks down The Ultimate CEO Dashboard — the exact 5 metrics that determine your company’s enterprise value?

DM Nick with the words "CEO Dashboard" on LinkedIn, and he or his team will send you a copy of the cheat sheet so you can start applying it in your business right away.

To get your copy of Nick’s new book, go to https://www.amazon.co.uk/Exit-Millions-Private-Blueprint-Business/dp/1068243902

Exit Your Business For Millions - Download This Guide: ⁠go.highvalueexit.com/opt-in ⁠

Nick’s LinkedIn: ⁠https://highvalueexit.com/li⁠

Nick Bradley is a world-renowned author, speaker, and business growth expert, who works with entrepreneurs, business leaders, and investors to build, scale and sell high-value companies.

He spent 10+ years working in Private Equity, where he oversaw 100+ acquisitions, 26 exits, and over $5 Billion in combined value created. He has one of the top-ranked business podcasts in the UK (with over 1m downloads in over 130 countries). He now spends his time coaching and consulting business owners in building and scaling high-value business towards life-changing exits.

This Podcast has been brought to you by Disruptive Media. ⁠https://disruptivemedia.co.uk/