Talk to most business owners about enterprise value, and the conversation quickly turns to selling the company. Walt Gilligan, who leads In Position, takes a different view of what that number actually represents. In his work with middle-market businesses, he treats value as something built through daily operational strength rather than a prize calculated only when ink hits a purchase agreement. The goal, in his eyes, is giving owners real options long before a buyer or broker ever enters the room.
Moving Past the Exit Multiple
Valuation multiples might dominate financial headlines, but they rarely capture the everyday health of a company. Gilligan points out that fixing your eyes entirely on an eventual sale narrows how you run the business day to day. “When people hear ‘enterprise value,’ they often think about valuation, what a company might sell for,” he explains. “We think about it more broadly. Enterprise value is built over time through the strength of the underlying business: its growth prospects, competitive position, capabilities, financial performance, leadership, and risk profile.”
Build a stronger foundation, and the future opens up in several directions. Instead of waiting for a buyout offer to rescue or validate the business, a leadership team can decide what makes sense on its own terms. “The stronger the enterprise becomes, the more choices an owner has,” Gilligan notes. “They can invest, acquire, grow, recapitalize, transition the business, or sell, and they can make those choices from a position of strength rather than necessity.”
Where Value Quietly Slips Away
Businesses rarely run into trouble because of one dramatic mistake. More often, value leaks out through small, routine choices that seem harmless at the time. A steady stream of revenue can easily hide bad habits, encouraging teams to put off hard calls just because things look fine on paper. “I think a lot of value gets lost through incremental decisions that look perfectly reasonable on their own,” Gilligan says. “Companies pursue too many opportunities. They continue investing in customers, markets, or capabilities that no longer deserve the resources. They tolerate concentration or key-person dependencies. And sometimes they simply postpone difficult choices because the business is performing well enough.” Part of the trouble comes from tracking dollars while ignoring other critical assets. Money is not the only thing on the line when a company takes on another initiative; staff time and executive focus are equally finite. “The important thing is that capital isn’t the only scarce resource,” Gilligan says. “Management attention, talent, and organizational capacity are scarce too. Every time you commit those resources somewhere, you’re implicitly choosing not to use them somewhere else. That’s why we think resource allocation is one of leadership’s most important jobs.”
The Discipline of Saying No
For most middle-market companies, the problem is rarely a dry pipeline of ideas. The real challenge comes down to filtering out good opportunities so the team can focus on the great ones. Gilligan points to a handful of practical criteria his firm uses to cut through the noise, such as checking whether the market is genuinely attractive, weighing the true economics, and measuring the real risks involved. “That’s one of the hardest strategic questions because the problem usually isn’t finding opportunities. It’s choosing among good opportunities,” he says. “We look at several things. Is the market attractive? Do we have a genuine right to win? What capabilities would be required? What are the economics? What risks are we accepting? And importantly, what else won’t we be able to do if we pursue this?” Saying yes to every promising lead simply spreads a team too thin. Without clear limits, organizations end up doing a dozen things adequately instead of doing a few things exceptionally well. “Strategy requires exclusion. If everything is a priority, nothing really is,” Gilligan explains. “The objective isn’t to build the longest list of growth opportunities. It’s to identify the relatively small number of opportunities where the company can create disproportionate value and then commit behind them.”
Plenty of strategic plans look brilliant on paper, only to fall flat during actual execution. A leadership team might spot an open market and project strong returns, but an attractive forecast does not guarantee success. “This is where many strategic plans break down,” Gilligan observes. “A company can identify an attractive market and build a compelling financial case, but that doesn’t mean it can win.” Before committing time and capital, leaders have to look closely at their internal operations. That means finding the weak spots in their systems, team, and delivery model before the market exposes them. “We ask a very practical question: ‘What would have to be true for this strategy to work?’” Gilligan says. “Do we have the leadership, talent, customer access, technology, operating model, capital, and organizational capacity required? If not, can we build those capabilities, acquire them, or partner for them, and is the return worth the investment?”
Follow Walt Gilligan on LinkedIn for more insights on building enterprise value, strategic resource allocation, and scaling middle-market businesses.
