Navigating Preliminary Valuation Gates and Discussions

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Most conversations with clients and prospects nowadays revert to exit or acquisition multiples and drivers. This Strategy Lab reviewed important value considerations and their impact on the likelihood or timing of completing a deal and value considerations.

We like the process of considering exit value and timing (see our previous discussion of planning frameworks) as a way to affirm strategic priorities. The discussion can be a good capstone to a planning effort.

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To Win Enterprise Customers, Think Like A Strategist

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Fresh insights can be found by linking enterprise customer acquisition to proactive corporate strategy activities. Our experience reinforces the potential benefits of engaging a strategist to quarterback or coach enterprise selling efforts.

This Strategy Lab considers the selling benefits of leveraging and thinking like an Essential Strategist when undertaking enterprise selling efforts.

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The Dangers in Making and Using CLV and CAC Calculations

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This Strategy Lab turns our attention to incredibly important and incredibly misleading statistics used by just about every company, every investor, and every analyst:

The Cost of Acquiring Customer (CAC),  and;

The Customer Lifetime Value (CLV; sometimes called LTV, for Lifetime Value).

Let’s dig in.

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The Essential Strategist Reviews Common Strategy Terms

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In this Essential Strategist Lab session, we review important strategy terms. While not a perfect metaphor, the video utilizes a flight plan to illustrate the vocabulary.

September 1 is, in many organizations, the beginning of the planning calendar, as groups look to a) reach this year’s aspirations, b) review and assess annual performance, and b) complete the next year’s strategic planning and budgeting processes. A shared set of definitions can be helpful in structuring useful and efficient dialogue around the planning process. It’s not unusual to find terms used in different manners; we find some level of specificity valuable.

This is a first for our Strategy Labs: We are working with video, to see if it adds to the correspondence. Please let us know if you like the approach!



The approach an organization takes for positioning and competing within its defined markets.


The organized ideation and execution outline that a company or organization follows in delivering its strategy. Traditionally business plans outline a 3 or 5 year time horizon, with specific expectations for the next 12 months. Ideally, plans are more dynamic or shorter-term.


The process or pattern that results in execution of the plan. We place the greatest emphasis on the ideation and assessment components, and have found that it is the process or pattern, in its consistency and fluidity that typically delivers the greatest portion of the overall process.


The overarching reason for an organization’s being. In military terminology, a mission is most usually the objective that pulls together a sometimes-disparate team: The penultimate goal of a collective of people and resources. In the United States, a mission statement more frequently refers to a higher-level, relative and evergreen ambition for an entity. While most organizations begin with a different, more specific and emotional mission, many larger organizations exist primarily to return extraordinary profits to its owners. So, a secondary mission, that can be shared with a broader set of stakeholders, is outlined and — perhaps — more relevant.


The more tangible, more achievable sister to the mission. Visions are typically time-constrained, and the best are transparent in their aspirational definitions. “We will get this completed or achieve this over-arching goal within this time frame.”


The mostly-quantified objectives of the organization. Some goals can be relative or qualitative, though the best, easiest-to-understand goals are specific and quantifiable.  Sometimes, goals are called objectives, and we view them as interchangeable in most organizations.


The sometimes-unspoken framework or shared characteristics that constrain the approaches to achieving a vision, or goal or target. Most people and organizations apply many value sets to behavior. Morality and legality are broadly shared; organizations may add others around – as examples – safety, respect, courtesy, authority and speed.

Situation Assessment

The prelude to an actual plan, in which an organization outlines its review of itself, its expectations and opportunities, competition and alternatives. In our experience, the situation assessment is the crux of a good planning process.

Milestones or Key Performance Indicators (KPIs)

The targets or data (or variances!) that provide interim guidance on an organization’s performance, or likelihood of achieving its goals or vision. The best milestones or KPIs are provided in short bursts, and are objective. Next to the situation assessment, milestones and the associated performance reviews are true opportunities for competitive advantage and differentiation. Milestones can also be called objectives, or interim objectives. Similar to our position on the use of objectives when talking about goals, we find this overlap useful.

Our Flight Plan Example

A flight plan illustrates, in brief form, many of these terms. It’s not a perfect metaphor, and our example way oversimplifies the flight planning process. It takes a huge number of extremely talented people and systems. That said, it’s a process that many take for granted, and that everyone can relate to. With that caveat (or apology, as the case may be), here is the analogy:

The flight plan is the Plan. Pilots, in coordination with a flight dispatch or planning department, go through the process of Planning a flight. Approval is received from the planning department and a governmental overview and review organization — the FAA, in this case.

The entire team completes a very coordinated and systematic Situation Assessment. Chief among the inputs are: payload and passengers, aircraft type, weather, maintenance, timing and budgetary constraints.

The Goal is very specifically outlined and is a common rallying cry for everyone involved: Deliver the plane, its passengers, crew and payload to the destination, safely and on time.

Values are less visible to us as passengers, yet play a critical role in creating and realizing the flight plan. Safety is an exception to the visibility stereotype: We hear flight attendants and pilots repeat that mantra during safety and in-flight briefings, and throughout the public reviews of efforts and aspirations. A flight plan conveys a team’s adherence to multiple sets of Values, including legal and regulatory compliance, maps and communications requirements. Checklists, of which pilots and all crew members follow many, are an important means to institutionalizing adherence to Values.

A flight plan is a series of Milestones or Key Performance Indicators (KPIs). Flight plans include specific routing information, defining waypoints, speed, altitude and timing. These interim objectives are a quick and real-time way for everyone to know whether the flight is on track. The checkpoints provide a built-in approach to making smaller and larger corrections in the spirit of achieving the overall Goal.

And, as Mike Tyson famously quipped: “Everyone has a plan until they get hit in the face.” Flight plans are impacted by weather, maintenance, crew constraints and competitive alternatives or emergency situations. Yet, even under those circumstances, the Plan creates a baseline for assessing those alternatives or managing those emergencies. As an example, flight plans include take-off-go-around (TOGA) instructions for expected runways and approaches. These contingencies can be taken if a milestone or KPI (e.g., unexpected speed or altitude or availability of a runway or approach) is missed —> It’s not an issue; it’s an expectation.

We encourage clients to establish and reinforce a common definition for strategic planning. It becomes an important part of the culture and creates a shared value.

The Essential Strategist Builds Deal Pipelines

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Corporate development plays out like most sales processes: Many situations need to be nurtured to create and sustain momentum around consistent results. The Essential Strategist creates and refines each part of the pipeline, gathering input and buy-in throughout.

Basically, sustained deal flow breaks into 4 parts:

  • Sourcing
  • Filtering
  • Negotiating
  • Closing

Each part of the funnel needs to be managed and maintained. Our experience highlights critical  and advantaging aspects for each segment:

Sourcing. Design and develop a broad deal sourcing network

Complacency can easily creep into corporate development programs, and the first place to look for that is deal flow and sourcing. As discussed in prior articles, the best corporate development managers are the most proactive. If a company is already being ‘spit polished’ by a banker, there is less opportunity (not none, just less) to steer a transaction favorably. Granted, many, many deals end up here, and there are ways to get creative deals finalized under these circumstances. And, on the positive side, companies that have engaged a banker and begun a process are more likely to go through with it (the process itself creates momentum and pressure).

A comprehensive sourcing strategy includes:

  1. bankers and industry advisors
  2. customers and sales executives
  3. industry networking events

Proactive corporate development teams take the time to walk exhibit halls, to watch interplay with the market and prospects. Popularity can be an amazing tell.

Filtering. Use (and test and stretch) existing filters to gain buy-in and insight

Essential Strategists are deal brokers, and need to work all sides of the equation to make things happen. The filtering process provides an important opportunity to test the acquisition ideas with a broader set of executives, decision makers and implementers.

Does the target fit with an identified need? Does the first stage of the pipe support broader strategic initiatives, or does it imply some modifications?

Now is the time to test real interest, and to get broad-based teams believing in the potential value.

Negotiating. Keep enough deals going all the time, to strengthen buyer power and ensure that only great deals get done

The only real negotiating power is the presence of an alternative. As salespeople, we work to differentiate – to a unique place – our offering. Otherwise, we drop price.

On the buy-side, the same challenge exists. The only way to exert real pricing power is to create and maintain alternatives. This truism is one of the primary reasons to consider corporate development as a continuous pipe or funnel. And, we will all still find ourselves in situations that present themselves as monolithic or pressure-filled. Experience truly reinforces the importance of being able to walk away, to manage the situation (even if it is just getting out) on acceptable terms.

Want to help the likelihood of having some buying power? Keep multiple deals in the pipeline, and flowing through it, all the time. Always find an alternative, if only to prove the value of the primary target.

Closing. Build integration plans into the deal process

This set of blog posts and articles make the case that Essential Strategist are, essentially, committed operators. Carefully planned integration and post-acquisition programs are an important differentiator in that regard.

Think like an operator; communicate to everyone; make commitments and keep them. Want to overpay because there are no good alternatives? The only way to do that is to exceed in the integration and be additive to the process, to the target, to buyer. McKinsey is doing some excellent work on procurement checklist of M&A programs — basically making the case that many purchasing programs can be locked and loaded well before the deal is closed —> We agree. Similarly, sales expansion and integrated incentives can be planned beforehand, with some hard work and creativity. We love procurement and purchasing programs (see here!); but they are a far, far cry from an impactful product release and customer communication plan.


Build a funnel; manage it; drop situations judiciously; communicate, communicate, communicate.

The Essential Strategist Manages Proactive Corporate Development

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The most important role of the Essential Strategist is to drive growth, naturally and acquisitively. And, that means managing an ambitious M&A / corporate development program. Like any purchasing process, M&A follows a basic truism: Options create power. In emerging or nascent markets, identifying alternatives can be difficult. In more mature markets, the challenge frequently […]

The Essential Strategist: Procurement Management is the Number 2 Profit Lever, with a Bullet

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Research, Projects, Thoughts

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It’s our goal to provide an update on a project or some research at least once a week. If interested, notices can be received via email (through the subscription service here).

Acquisition Success is in the Planning

Cape Fear Advisors, LLC Growth Strategies for Tech Enabled Service Companies

The oft-used rule of thumb is that 2/3rds of acquisitions fail to achieve their objectives. There is value in the old adage: Thinking through the downside probably changes the odds. What if there were ways to improve success rates?

What is Value?

Cape Fear Advisors, LLC Growth Strategies for Tech Enabled Service Companies

We just completed a project supporting a major business development initiative. Our client is working to expand its customer base by winning orders from some major purchasers. This is a relatively typical follow-on engagement for us, because it combines strategic, marketing and deal-making attributes. And, it provides a chance to teach the sales team about […]