Value Creation

Value can be defined in many ways.  LV2 Strategic Partners focuses on increasing the business’ economic value to its owners and shareholders.  Return on Equity (ROE) is a key measurement of this value.   

Value Formula

ROE = Net Income / Equity
  = Profit Margin x Asset Turnover x Financial Leverage

Profit Margin = Net Income / Sales
Asset Turnover = Sales / Assets
Financial Leverage = Assets / Equity

A business is complex with many decisions and actions affecting its value.  LV2 Strategic Partners has identified key value optimizers in the Value Formula defined as profit margin, asset turnover and financial leverage that when improved have a direct and proportionate increase in the business’ net worth.  Our focus involves working with the leaders of a business to identify the drivers initiatives that can create the greatest value for the business. We then provide the expertise, leadership and vision to significantly improve these drivers.  Our Value Driver Matrix defines the individual drivers that we focus on to create value for the business.