The Time Equity Group only works with established companies so the process begins with an extensive screening and due diligence on all potential clients. Since we only make money if we succeed at growing your company, we must be highly selective about the clients we take on so we go to great lengths during this initial phase to make sure we have an ideal fit with a client.
Once we have a signed deal with the client we immediately begin to prepare the business for sale and taking action to increase the valuation of the business. Using our advanced marketing strategies, we can typically double or triple a company’s sales within 18 – 24 months while employing other strategies to reduce costs, resulting in a larger and far more profitable company.
The diagram below illustrates how our process would work with a typical company doing $2 million in sales and earning an after tax 15% profit margin, for $300,000 in net income. Based on the gross sales, the company only justifies a 3X earnings multiple, so the initial valuation is $900,000.
Over a period of 18 – 24 months, we inject massive amounts of marketing while streamlining operations and cutting costs. At the end of this period, we’ve increased sales to $10 million, while increasing the after-tax profit margin to 30%. At first glance, you might think the company would be worth ten times as much. However, because the gross sales are now $10 million, the company now qualifies for a much higher 8X earnings multiple. Therefore, in this hypothetical example, the company has increased in value by more than 24 times, for a final valuation of $24,000,000.