Savant hosted a private dinner at the RAF Club, Piccadilly on 24 September 2025. The room was filled to capacity, with more asking to join. We were not there to haggle over valuation at the end of a process but to treat value creation as day to day management so the outcome is ready when the time is right.
Mark Sheldon, Founder and Executive Director at Savant, opened and set the tone. He called out a year that has tested most boards: recession risk, stubborn inflation, expensive debt, pressure on sterling, nervous banks, job losses, households running down savings, little relief for hospitality, repeated tax stories, and LinkedIn’s plan to train artificial intelligence on UK executives. Even so, since July Savant has seen more CEO, CFO and CIO movement, often after acquisitions or at the start of new three year plans. Change creates openings and rewards early, disciplined choices. As Mark put it, whether you are running a rocket, a golden goose, a zombie or a moonshot, preparing for exit is never wasted effort. Decisions made early can transform the finish.
Valuation and Margin
Wendy Hart, Corporate Finance Partner at HMT, brought the buyer’s arithmetic into the room. Profitable trading businesses are priced in two steps. Enterprise value is sustainable EBIT or EBITDA multiplied by a multiple. Equity value is that figure plus free cash, minus debt. Easy to write down, unforgiving in practice.
The lever leaders truly control is sustainable operating profit and the margin behind it. Buyers read margin as quality of earnings. Sub 10% margins are marked down because low margin signals weaker control and lower customer importance. If EBITDA flatters an asset heavy model or capitalised development spend, expect normalisations.
The EBIT versus EBITDA debate is only won with planning and evidence. Invest where it moves future profit and track payback so you can show it.
Multiples translate years of profit into price. At eight times, payback is eight years if profit stands still and there is no synergy. One extra turn can move proceeds by millions. What pulls a business up the range is clear: scale and pace of growth, recurring or repeat revenue, technology enabled delivery, real differentiation, intellectual property, know how and proprietary systems, a credible market profile, capacity for bolt ons, sensible customer spread, and quality of earnings visible in both gross and net margin. Wendy gave an example of an M&E business at £40m turnover and £3m EBITDA that would typically sit in the 3–5x range. Even so, if the range is three to five times, the difference between bottom and top is six million pounds to the sellers.
The price to shareholders changes when enterprise value is turned into equity value. Debt and free cash are not footnotes. Deferred revenue is often treated as debt where work remains. A mortgaged freehold usually counts as debt with no uplift. Working capital is reviewed over at least the past twelve months. Large intra month swings, slow debtors or heavy stock drive a deduction so a buyer can trade normally on completion. If you can collect faster or sensibly extend creditors, do it now. The convention is applied consistently and it bites if you have not managed to it. Keep margin, multiple and cash on every board agenda.
Value creation ahead of exit
Helen Villiers, Investment Director at YFM, set out the investor view. Funds generally target an average of two to three times return on their investment over three to five years. YFM have experience of exiting businesses to both strategic buyers and larger private equity. None of that works without a credible route to exit from day one. The investment committee test is the same each time: who buys this, and what will change after today.
Due diligence helps to target the value drivers and builds the plan for the next three to five years. Examples include: Increasing operating margin, growing market share and building defensible intellectual property. Ahead of exit look to remove buyer deterrents, from late filings and regulatory gaps to key person dependence.
There are three key parts to an exit plan. Management first, buyers back teams, so have the right people for this stage and be explicit about succession. If a founder expects to exit with private equity, succession often starts on day one. Market is next, you cannot set the cycle, but you can show you understand it and have used it well. Time the process and begin the next leg early, for example first steps in geographic expansion, so there is proof now and headroom for the next owner. Then numbers, growth and profitability matter, and some buyers only engage above a scale threshold. Quality of revenue moves the multiple. Long contracts and recurring income often count more than size. The biggest trip wire is missed forecasts without a clear reason. Buyers will read historic board packs.
A strong P&L can still be undone by weak plumbing. Gaps in governance, documentation, tax or legal work derail processes. Identify issues early and fix them. Keep the plan alive with an annual strategy day, away from the noise, to test alignment, pace, timing and the buyer list.
What boards should do now
Know your equation and a realistic multiple range. Lift margins above 10 % where possible. Build repeatable revenue and show retention. Tighten the cash cycle and expect a twelve month working capital review. Be clear on deferred revenue, property and debt before a process. Put leadership and succession on paper. Map buyer logic and timing. Hold a strategy day each year with exit on the agenda.
The evening closed on a simple point. Value is not created in the data room. Wendy showed where it is measured and which levers move it. Helen showed how investors judge whether it will arrive and what must be in place for a clean exit. Treat both as everyday management and the exit becomes a plan, not a scramble.
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