Wexel Art – Business Valuation Through a Buyer’s Lens

v360^® Case Study – Examining Your Business Through the Lens of a Buyer

Business owners are typically neck-deep in moving their business forward each day. It’s less natural for them to pause and reflect on where they’re moving it to, the reality of that destination, and whether all the right pieces are in place to get them there. Arguably, the best way to assess those elements is to examine the business through the lens of a prospective buyer.

That’s precisely what the co-founders of Austin-based Wexel Art, Natasha McRee and Morgan Doherty, recently did with the help of vcfo’s v360® Enterprise Value Roadmap. vcfo examined their business across six dimensions via 154 base questions covering financial and non-financial criteria that impact business health and valuation. Here, we look at what the v360 process surfaced for the Wexel team and what the experience was like.

About Wexel Art

A 2009 exclamation of “We need to crack the code on how to display an ever-changing collection of kids’ art” was the spark that lit the Wexel Art flame. There was no thought of starting a business, but rather of how to contend with the growing stacks of art from the McRee boys in her kitchen. That led to an exploration of curating and presenting the artwork in a single hallway of McRee’s home. Visitors were wowed by the display and repeatedly asked, “Where can I buy this?”

Buoyed by enthusiasm for their work, the co-founders launched Wexel Art in 2010 with four product SKUs and part-time attention to their endeavor. Observing the successful flow of website visits converting to orders, orders transmitting to their fulfillment partner, and funds flowing seamlessly to their bank, the pair realized the scalability and potential of their business. They jumped in full-time, have grown steadily since, and now offer a wide variety of products, including frames, shadow boxes, framed art, and more home décor items that can be purchased online and across thousands of stores nationwide.

It didn’t take long for the co-founders to realize that the company’s growth was outpacing the learn-on-the-fly QuickBooks bookkeeping processes they’d put in place. Early on, they reached out to vcfo and were paired with a fractional CFO who helped them set up a chart of accounts, improve inventory management, and strengthen financial reporting. After several years of working with vcfo, they grew their relationship with us, employing a fractional CFO that meets quarterly with them. A recent check-in signaled that a v360 evaluation could benefit the business.

Building a Better & More Valuable Business

McRee and Doherty shared with vcfo’s Elbert Johnson their wish for a clearer picture of where Wexel Art could go, whether they were doing what would be needed to get there, and whether the business could support their big ideas. With Johnson’s advisement that the v360 process would provide a solid measure of Wexel Art’s current state (compared to benchmarks), trajectory potential, and areas for improvement, the project took flight.

The v360 process examines maximizing business value not just from a revenue and profitability growth standpoint, but also the qualitative features that need to be in place to realize one’s long-term potential and desired outcome for the business (e.g., profitable future sale). Doherty found that the surprising mix of potential-buyer-oriented questions shifted her mindset in a helpful and strategic way. She noted, “We’re accustomed to presenting our business to potential customers, not potential buyers. It was insightful to look at our company from that different viewpoint. We found that many of the elements we talked about (e.g., cybersecurity, vendor agreements, etc.) were areas where we need to sharpen our pencils.”

The assessment’s results found Wexel Art in a very strong position overall. They were consistently generating healthy profits, had demonstrated sustainability, and were at a point where they could now meaningfully address things that matter to larger companies. Additionally, the value potential that the evaluation revealed was even higher than what the co-founders had originally thought was possible. Among the specific recommendations the process provided were ways to better align their staff and partners around the company’s core values and solidify artist agreements to reduce risks.

Much of what the v360 process evaluates is in the interest of handling things now when they’re easy rather than later when they become increasingly more difficult. In the artist agreement example, the finer points of contracts may seem relatively minor but are typically among the first tier of items a potential buyer will investigate. The worst time to renegotiate contract clauses is the period just before a transaction when a slate of other transaction tasks is pressing and you still need to run your business and keep people engaged.

Clarity and a Confident Path Forward

Business owners should have a well-formed view of where they want their company to be in five years, ten years, fifteen years - not just a sales and marketing approach or a general drive to get progressively bigger. For the Wexel Art team, the v360 process validated the foundational work the co-founders poured into their business over the past several years and sharpened their focus on the future. When asked about the process and the insights they gained from it, here’s what they had to say:

“The v360 work equipped us with extremely helpful feedback on how to optimize from our current state and build in a way that maximizes our value. The roadmap and recommendations we received were very valuable to widen our focus on the business as a whole and better align our partners on where we want to go and how we want to get there.” – Morgan Doherty

“The findings from the project identified broader strategic areas that we need to focus on and took us out of the day-to-day weeds. We’ve talked about becoming a company of a certain size and seeing that our numbers were further north of that amount really brought us a lot of confidence. We now have a roadmap that will help us reach that point.” – Natasha McRee

All too often, companies grow before they're ready. Those who do are put in problematic positions of not being able to absorb all of the issues that arise at different stages of growth. The more that business owners hold everything close to their chest and stay heads-down on day-to-day details, the more they introduce issues that can derail the long-term health and value of their business.

Invest in your business by taking time to reflect on your long-term goals and your progress and path for achieving them, but don’t stop there. Challenge your views in a healthy way by examining your business as a prospective buyer will – unemotionally and against a wide array of financial and non-financial factors. You’ll be glad you did.

---

Want to learn more about v360™ Enterprise Value Roadmap and what it would mean for your business? Request a Free Consultation with a vcfo expert who can help. We’ve partnered with more than 6,000 businesses in our 29 years and are ready to put our expertise and experience to work for you.