Ownership value explained - Ablona's view

November 19, 2012

 'Ownership Value' is the result of the long term balancing of three fundamental components:

  • Growth

  • Cash Flows

  • Capital

 

Ownership value is the intersection and balancing of these three components. Growth is long term implied by the definition as is ownership value. Of course this doesn't rule out making short term decisions to move things forward in the right direction.

 

Growth

Growth is by nature involves serving more (new) customers and/ or making existing customers buy more from your company with current or new offerings. In competition.

 

 

Another source of growth is increasing the perceived value of offerings to the customers and to reflect this in the pricing.

 

Growth could be organic or growth by acquisition/-s. Growth by acquisition is underestimated. See https://www.ablona.se/single-post/2012/02/22/The-most-profitable-Growth-Strategy-1 for elaboration of this.

 

Cash Flow
Cash flow is the essence of the customer values the operation produce and the ability to capture a portion of it. Cash flow is the customer payments less all expenses needed to produce these customer values. This cash flow from operations can be used to invest for future growth or give owners a return on their investment. Cash flow is a neutral comparison indicator of the capabilities to produce value between product and services, between companies and between industries.

 

Capital
Capital comprises both the value creating assets and how these key assets have been financed. Among these key assets you will probably find ‘the brand’ as well as the part of employees’ knowledge captured in procedures, programs, databases, patents etc. .

 

Balancing
The challenge is to actively make the balancing and optimize 'Ownership Value' with respect to current situation. Ablona has the tools and processes to help make things happen.

 

 

HULO Map™ is one of our efficient tools to help make insights, balancing actions and commitments. Ablona has other tools for quantification, evaluation and comparison.

The balancing of growth, cash flows and capital is an ongoing strategic process with four phases.

 

 

 

  •  What's our Objective and Why?

  • Do It!

  • Performance of company?

  • Are we closing the gap?

 

   

 

The 'Ownership Value' Wheel

 

 

 

 

 

 

 

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