Ways to Use Models

To help maximize profitability: You can do so through the use of optimizing prospect circ, and 12-, 24-, and 36-month lifetime value calculations. This includes decisions about sales vs. profit growth and improved “managing” of reported profits.

For company valuation calculations:

1) to tell the “catalog opportunity story” when raising growth financing — whether from a local bank or equity/debt source;

2) when buying another company —to help define purchase price and secure financing;

3) when selling part or all of a catalog business;

4) for customer list valuations in deal-making — or for your local banker, who won’t increase your line of credit without strong, analytical explanations; and

5) for “legal proceedings” assistance — in lawsuits where true profitability and valuation are important.

Larry West is president of West Cos.. a New York-based valuations and acquisitions consulting firm. You can reach him at dmgrowth@yahoo.com.