How BD Drives Valuation

What is Business Development?

Buying or selling a business?

Business Developers play a key role.

Corporate Development is a business development specialty.

Corporate Developers (also called Corp Dev or CD) find target corporations and manage your corporation's merger and acquisition (M&A) process.

In addition to the CD, your entire BD team plays a key role too.

Here's why...

A corporation's value is the key to completing deals.

Price = Intrinsic Value + Extrinsic Value

1. Intrinsic value consists of tangible net assets

Deals done purely on intrinsic value are usually distressed companies.

However, healthy companies typically sell for much more than that, why?

2. Extrinsic value is the price paid that exceeds intrinsic value, this intangible value is called Goodwill.

Buyers may use valuation models based on multiples of Revenue or Earnings to help tangibly rationalize a fair price paid in excess of net assets.

Earnings multiplier valuation are the most typical.

See slides for how the multiplier is determined and BD's influence.

To maximize goodwill, you must implement people and processes that continually build brand trust via customer and community advocacy.

So, goodwill is fundamentally equal to brand trust.

Guess who builds that brand trust...

Your business development team.

The definition of BD is, "customer and community advocacy that creates corporate growth."

Otherwise known as...Winning Through Friendship (WTF).

So, if you want to maximize your multiple...

Optimize your BD team.

Tony Gray, BDP Gray, BDP
Author of the Business Development Body of Knowledge (BD-BOK)

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