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Michael Koeppel: Deciphering the True Value of Businesses Based On Four Decades Of Investing Experience

Michael Koeppel
Photo Courtesy: Michael Koeppel

Understanding the intrinsic value of a company goes beyond mere numbers. It’s an intricate blend of art, human capital and science, a skill that Michael Koeppel, the Managing Director of Lakelet Advisory Group LLC, has mastered over a distinguished career. With a deep understanding of financial intricacies and an innovative approach, Koeppel has established himself as a vanguard in demystifying business valuation. He approaches this field not just as a financial exercise but as a comprehensive analysis of a company’s life story. “Valuation is more than just crunching numbers. It’s about understanding a company’s journey, its position in the market, and its potential for future growth,” says Koeppel. Here are three pivotal insights from Koeppel’s extensive experience.

Two companies in the same market with basically the same financial results – would they be valued the same? If one, simply utilized a standard multiple – then yes. The basic fact is why a holistic approach is required. One would be remiss if consideration was not given to the management, client base, international operations, the manufacturing environment, vendors, contracts, supporting systems, debt structure, ad infinitum.

Koeppel’s international experience, especially in Brazil during a period of hyperinflation, underscored the need for adaptable valuation strategies. “Valuing a business requires an in-depth understanding of the industry it operates in. Each sector has its own unique trends and challenges, which must be factored into the valuation process,” Koeppel emphasizes. This global perspective has been instrumental in shaping his approach to evaluating companies under varying economic conditions. Appreciating the operating environment of an organization is paramount whether exploring the industry, the economy, or the macroeconomic picture.”

A distinctive aspect of Koeppel’s valuation philosophy is the emphasis on human capital. Last summer, Koeppel authored a three-part article that delineated the need to quantify human capital. A strong believer that the right management team can add significant tangible value no matter what industry in which they are operating. The adverse is equally true — a poor management team could not add significant tangible value regardless of the operating environment they are facing. For him, the value of a business is intrinsically linked to the people who run it. “Assets and revenue are important, but the real value of a company often lies in its human capital — the skills, experience, and potential of its employees,” Koeppel notes. This approach involves a thorough evaluation of management teams, employee skill sets, and organizational culture, which Koeppel believes are key indicators of a company’s resilience and growth potential. This situation with regards to the emphasis on valuing human capital is even more critical in the two extreme positions of a company’s life. This being as a startup and as a distressed/bankrupt entity. In these diverse life stages of an entity – the experience of management and their ability to move quickly is critical.

In an era where technology is revolutionizing every industry, Koeppel is at the forefront of integrating AI and other technological advancements into the valuation process. “The advent of AI has transformed how we handle quantitative data, allowing valuation experts to concentrate on qualitative factors that are pivotal in determining a company’s true worth,” he explains. This fusion of technology and expertise is a cornerstone of Koeppel’s vision for the future of business valuation. AI changed the entire process with regards to conducting business valuations.

Beyond these core principles, Koeppel’s approach is also characterized by meticulous attention to detail and a commitment to objectivity. “Each business has its own unique story, challenges, and aspirations. Our role as valuers is to objectively assess these elements and provide a clear, comprehensive picture of the company’s value,” Koeppel asserts. This ethos is evident in his collaborative work style, where he engages closely with clients to understand their specific needs and goals.

For those eager to delve deeper into the world of business valuation and gain insights from a seasoned expert, Michael Koeppel’s wealth of knowledge is an invaluable resource. You can visit Lakelet Advisory Group’s website to explore its extensive articles, schedule a consultation, or enroll in one of its comprehensive workshops. 

Published by: Nelly Chavez

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