Blog

How 'pooled data' reveals your company’s value

By Rock LaManna | February 13, 2017

When it comes to assessing a company’s value in a possible M&A transaction, reducing risk is the number one concern.


Bankers use business appraisers, but that’s not their only resource for assessing your company’s value. Instead, they use RMA data. RMA stands for Risk Management Association. It’s an association created by the financial industry to help pool data and assess the value of companies. As the name implies, it’s all about reducing risk.

Risk is what keeps a banker up at night. And when it comes to assessing your company’s value in a possible M&A transaction, reducing risk is their number one concern. Let’s take a look at how RMA data can work for you, and how it could be the secret to selling your company.

How RMA Data Works
Keep in mind that the majority of deals bankers encounter are privately held companies. Publicly held companies are required to disclose company financials. Privately held businesses, on the other hand, can keep their records private.

That puts the bankers in a quandary, because they have no way of assessing companies. Where are the comparables if everything is kept under wraps?

To overcome the issue, the companies pool their data. It’s not personal data -- just the company financials. RMA then aggregates the data and summarizes it, giving companies a method to compare apples to apples.

This is really important for banks. There is simply no other way to access these datasets, and it helps them evaluate the marketplace as a whole.

Can You Use This Data?
RMA is not the only game in town. There are companies that aggregate datasets from companies like BIZCOMPS and IBA Market Data. Companies like ValueSource aggregate these different datasets to provide lenders and independent consultants access to this information.

But is this information only for companies that are for sale? Absolutely not. Many companies use this data to compare themselves with their peers, and make strategic changes in their operations. Here’s a couple examples:
  • Use it to improve your working capital. How does your capital compare to your peers? Perhaps RMA will reveal that you’re not in great shape, and you need to tighten up your Accounts Receivable and Inventory Control.
  • Use it to see how you’re making money in comparison to competition. Really get down to brass tacks on where your money is coming. Is it gross margin? Volume? Leverage?  And does your competition do it the same way?
Ultimately, the RMA data helps you see the marketplace like an investor. You’ll review your financials just like they review your financials.  More importantly, you’ll understand that an investor looks for capabilities and potential above and beyond anything else. RMA data provides you with a glimpse into your company’s financial performance today. Now it’s up to you to use the data to shape the future.



Rock LaManna is the author of L&NW's popular The Bottom Line column. Rock helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. He is President and CEO of the LaManna Alliance, and provides guidance on how to grow a printing business, merge with a synergistic partner, make a strategic acquisition, or create a succession plan. Rock can be reached by email at Rock@RockLaManna.com.
  • Latin America’s Label Market

    Latin America’s Label Market

    Greg Hrinya, Associate Editor||March 13, 2017
    Competition and emerging print technologies define this region.

  • Low Migration Inks

    Low Migration Inks

    Steve Katz, Editor||March 13, 2017
    This niche consumable is a growing and complex segment of the food packaging supply chain.

  • Flexible Packaging

    Flexible Packaging

    Greg Hrinya, Associate Editor||March 13, 2017
    Label converters seize opportunity in this fast growing market.