Founded in 2000, Easton Associates provided product and business strategy consulting services to companies in the life science industries. In 2009 they approached us asking for a business valuation and market risk assessment and we valued them at $5m. By helping them restructure the leadership and to improve sales and marketing over the following two years we helped them grow their profit and the value of the business increased to between $12-$15m. In 2012 Easton sold to Navigant for $15m.
The client’s situation
Easton was a consultancy on the up, but it was struggling to convert sales into revenue and profit. The ambitious leadership team was keen to rectify this and turn the business into a thriving consultancy that had a true handle on its bottom line and was worth something on the M&A market. They asked Equiteq to help.
When we first came on board, Easton had five partners. To improve decision making Equiteq helped the team re-structure and Easton appointed a chief executive officer. She was charged with, and given a bonus for, delivering a new profit target. Easton used Equiteq’s 8 lever Equity Growth Wheel to help them introduce best practice in driving sales and profit growth, improving intellectual property, and formalizing sales and marketing processes. Turning sales into revenue and profit was a key priority, and Easton needed to put consistency around their sales and business development processes and to make staff more accountable for delivering targets. Gross margin targets were set in line with capabilities and incentive bonuses offered on delivery. Elsewhere, building value into a ‘people’ business, where, in theory, your intellectual property is in people’s heads and on laptops, requires a unique approach. We helped Easton build detailed market propositions and put rigour and process around how they captured and recorded their valuable intellectual property.
How did this deliver value to the client?
Easton made rapid progress over a two year period using the Equity Growth Wheel, with a specific focus on sales and profit growth, market proposition, intellectual property and management quality
Equiteq supported Easton in:
- re-structuring their leadership team to provide better clarity and focus
- growing revenue by 37% – from $9.5m to $13m in two years
- growing profits from $650k to $2.5m – an increase of 280%
- Easton’s valuation grew by $10m in two years
The EBIT value of the firm started at four but reached a multiple of 7.5 at the end of the engagement