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Strategy

Value Creation

Value creation is the work an owner or investor does to make a company more valuable, such as growing sales, improving margins and building a stronger team.

Value creation is how a company becomes worth more. Common levers include sales growth, better margins, stronger leaders, better systems and smart acquisitions.

For example, a company with $5 million of EBITDA adds a sales team, upgrades its software and buys one small competitor. If EBITDA grows to $8 million, the company is worth more at the same multiple. The numbers are for example only.

For owners, value creation is both a goal and a test of a partner. A good partner should explain exactly how it will help. Ask for specifics, not slogans.

Capstreet describes its Capvalue Framework® in three stages: "Research", "Build Scalable Platform" and "Drive Business Transformation". It also notes: "There can be no guarantee that Capstreet will be successful in applying its Capvalue Framework®." See the approach at building greatness. Related: platform company and buy and build.

Read nextThe Capvalue Framework®

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