Earnings: the number a buyer multiplies
Earnings drivers are the six elements that set the number a buyer applies the multiple to: pricing power, gross margin, revenue growth, overhead efficiency, recurring revenue, and retention. Each is scored from 0 to 100 today and given a target, and the gap between the two is the work.
The elements
What sets the earnings a buyer multiplies?
Pricing, margin, growth, overhead, recurring revenue, and retention set the number a buyer multiplies.
05 · B2
Pricing Power
Ability to raise prices without losing volume.
What the assay measures
Realized price increases over the trailing 24 months, set against volume and churn in the same period.
06 · C2
Gross Margin
Revenue left after direct costs; the ceiling on everything below it.
What the assay measures
Gross margin percentage, its three-year trend, and its position against the industry benchmark.
07 · B3
Revenue Growth
Year-over-year top-line growth, sustained and explainable.
What the assay measures
Three-year revenue CAGR, with the share attributable to organic versus one-time sources.
08 · C3
Overhead Efficiency
Fixed costs held flat as revenue scales.
What the assay measures
SG&A as a percentage of revenue, trended against revenue growth.
09 · B4
Recurring Revenue
Revenue that repeats under contract or habit without being re-sold each period.
What the assay measures
Share of revenue under contract, subscription, or documented repeat purchase.
10 · C4
Retention
Share of customers and revenue that stays from one year to the next.
What the assay measures
Gross and net revenue retention by customer cohort over the trailing twelve months.
Against a target
How are the earnings elements scored?
Each element is scored from 0 to 100 today and given a target. The gap between the two is the work.
Compounds
Where earnings bonds with the rest of the table
Buyers underwrite some elements together, as one question. These are the compounds the earnings elements take part in, and the elements they bond with.
Where it is worked
Where FNDRS works on earnings
Each element is worked at a stage of the journey, and most sit in one of the six pillars of value. Here is where the earnings elements land.
The stages
Grow revenue, profit, capacity, and capability without adding fragility or owner dependence. The earnings engine and the multiple, worked in order of dollar impact.
Rework and scale in the FNDRS process
The pillars
The first thing a buyer's accountant looks for, and the pillar that sets the ceiling on every other one. Clean books, real margins, and numbers that survive a quality-of-earnings review.
Read the pillarNot a hockey stick, a plan with evidence. Buyers pay for growth they can underwrite: a market with room, pricing that holds, and a motion that does not depend on the owner closing every deal.
Read the pillarBuyers underwrite this compound before anything else: revenue that repeats without being re-sold, customers who stay, and no single account that can sink the deal.
Read the pillar
The families
Seven families, one table
The table reads left to right in the order value is created: what you start with, the engine, the multiple, the discount, the transfer, what you keep, and what all of it is for.
Earnings
Pricing, margin, growth, overhead, recurring revenue, and retention set the number a buyer multiplies.
See where your earnings elements stand
The exit score is the first assay: fifteen minutes, six pillars, and a first read on the elements that matter most.