Demystifying Value Creation by Simon Vumbaca, Principal and Founder ASV Private Office

Demystifying Value Creation by Simon Vumbaca, Principal and Founder ASV Private Office - 1

As part of the daily work in a private office, we receive pitch decks. Plenty of them. Inevitably, in every investor’s pitch deck there is always a value creation slide. It’s usually a reference to a proprietary secret sauce and some assumptions, all coloured with incredibly optimistic numbers.  

But what does value creation actually mean?  

Investors and management teams have to define and deliver ways of building real value, that is to make or get back more that has been invested. Substantially more. As financial engineering slips down the preferred playbook, cost of money rises, and so other more historically sound models have to be implemented and deployed.  

A wise man (my father) once said that you make real money when you buy a business, and the bonus money when you sell it well. Understanding the headroom potential and your particular ability to realise that opportunity is the first step on a value creation journey. 

What is the real space of your product or service? What is the problem it is solving and how big and crowded is that space? How you craft the deal going in depends on all the above.   

“Creation” implies doing something new, but often when we hear about value creation it’s actually about doing something better – unblocking systems, reducing costs, optimising processes. This is undoubtedly part of downside protection and these operational improvements are where you build the launchpad to actually “create” value. But they are just the obvious ones. A real market changer will always surprise you with a dose of unexpected.  

Creating value is sometimes about taking a step back from operational focus and providing a fresh perspective. Sometimes it is about an in-depth technical knowledge of an industry whilst solving a real problem.  

At ASVPO the focus is on positive value creation, scalability and futureproofing. To us they all go hand on hand as one. This is very much our playbook – we garner a deliberately diverse range of opinions with a view to unlocking value. This might include harnessing a deep knowledge of intellectual property or licensing to uncover new revenue streams, a pioneering approach to AI technology and digitisation to transform the capabilities of a business or simply deploying best-in-class marketing expertise to hunt down market share. 

ASVPO’s mission is to drive sustainable growth for the benefit of all. Sustainability and ESG are not always considered value creation tools and are the subject of some politicised debate but there is no doubt in our mind that a sustainable business is a future proof, more resilient, more valuable business that delivers pre defined value over a longer period.  

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