Show Notes
As a business owner, you’ve likely heard terms like EBITDA, working capital, and Weighted Average Cost of Capital (WACC)—but do they feel relevant to your day-to-day decisions? In this episode, I sit down with Ken Sanginario and John Lawlor to demystify these concepts and show how they directly impact your ability to grow, scale, and transition your business.
We’ll explore how to measure and grow your business’s value using actionable tools, like Ken’s Value Opportunity Profile (VOP), that connect financial performance to your ownership goals. Whether you’re thinking about selling in the next few years, stepping back from day-to-day operations, or just getting a clearer picture of your business, this conversation will help you build a roadmap for sustainable growth.
This episode is packed with practical advice and relatable insights that will bridge the gap between high-level financial concepts and the operational realities you face as an owner-operator. Let’s make the numbers work for you, not the other way around.
What You’ll Learn in This Episode:
- Why valuation is more than just a multiple of EBITDA—and how it reflects how well your business operates without you.
- The connection between operational efficiency, financial metrics, and long-term business value.
- How the Value Opportunity Profile helps you identify areas to improve your business.
- What buyers look for in a business—and how to position yours for maximum value.
- How to connect financial metrics to your personal ownership goals, whether it’s scaling, selling, or stepping back.
Ken Sanginario is the founder of Corporate Value Metrics and the creator of the Value Opportunity Profile (VOP), a system designed to assess and enhance the eight functional areas of a business. With over 30 years of experience as a CPA, business advisor, and valuation expert, Ken has worked with countless owner-operators to help them unlock sustainable growth, increase equity value, and achieve their ownership goals. His practical, results-driven approach ties financial fundamentals to strategic decision-making, making him a trusted partner for business owners looking to maximize their independence.
John Lawlor is a seasoned business advisor, leadership coach, and expert in organizational development. With over two decades of experience helping businesses scale effectively, John specializes in aligning leadership, culture, and operations to create high-performing organizations. A key collaborator in the development and application of the VOP, John brings a deep understanding of how behavior and strategic planning drive business success. His focus on fostering communication and engagement across all levels of a company has made him a sought-after resource for owner-operators aiming to build businesses that work without them.
Chapters:
- (00:00) Introduction of guests John and Ken: Why understanding your business’s value matters for owner-operators
- (06:00) Intro to guests, John's background and his focus on helping businesses improve, how John and Ken began working together
- (10:00) Ryan's journey of understanding weighted average cost of capital and return on equity, explanation of inconsistent accounting measures, valuation demystified: beyond EBITDA—what buyers really care about
- (19:00) Exploring the concept of return on equity and its relationship to free cash flow and investor expectations
- (25:00) Highlighting the importance of understanding free cash flow in business decisions, using an example of a client with high EBITDA but low free cash flow
- (35:15) Explaining IRR, risk-adjust cost of capital, cash-on-cash returns and the time horizon of investments, aligning financials with ownership goals: connecting the numbers to your vision for the future
- (43:00) Businesses need to think like investors and focus on maximizing cash flow and value, not just accounting metrics, how to position your business for buyers, investors, or scaling.
- (51:00) John weighs in, what motivates the owner-operator? The decision to sell a business versus continuing to operate it, considering factors like CEO salaries and lifestyle needs
- (1:00:00) Value Opportunity Profile (VOP): A tool for assessing and improving business performance, the role of cash flow and operational efficiency in creating value, pushing strategic planning, projections and financials
- (1:30:00) The multi-layered filter system, John departs, Ken continues, what value does the business need for the future? Strategic planning and VOP use for future planning
- (1:45:00) Asking clients to take a step back, using the three-statement model, closing thoughts, steps to take today to increase value and gain clarity.
- Rate, comment and share with the owner/operators you know!
Ryan Tansom is a seasoned entrepreneur, speaker, and the founder of Independence by Design™, a transformative ownership framework for growth-oriented business owners. After turning around and selling his family business in an eight-figure exit, Ryan spent over a decade dissecting the lessons learned from his journey. His mission is to help other business owners avoid the pitfalls he encountered by providing them with the tools and knowledge to align their business operations with their personal and financial goals.
With a deep understanding of the challenges faced by owner-operators, Ryan developed Independence by Design™ to empower owner-operators to create sustainable cash flow, grow their company’s equity value, and achieve true independence. He has shared his insights on hundreds of stages, including Vistage, EO, and industry associations, and has reached over 500,000 listeners through his podcast.
Ryan is passionate about helping business owners get unstuck from the day-to-day grind and design a business that serves their life, not the other way around.
Resources:
Ken Sanginario LinkedIn
Independence by Design™ Workshop: https://ryantansom.com/independence-by-design-workshop
Independence by Design™ Ownership Coaching: Ryan Tansom’s Ownership Accelerator programs and coaching https://ryantansom.com/coaching
Ryan Tansom Website https://ryantansom.com/
Ryan Tansom LinkedIn https://www.linkedin.com/in/ryantansom/
Ryan Tansom Twitter https://twitter.com/RyanTansom
Ryan Tansom YouTube https://www.youtube.com/@ryantansom
Ryan Tansom 30-Minute Ownership Strategy Call https://calendar.app.google/tsKk7z6ohugDchWq8
Sound Bites:
“Valuation isn’t just a number—it’s a reflection of how well your business can run without you.” – Ken Sanginario
“Simplifying metrics like WACC and working capital helps you make better decisions about growth and cash flow.” – Ryan Tansom
“The Value Opportunity Profile turns a messy business reality into a clear roadmap for creating value.” – John Lawlor
