First, consider what the Exit Model is measuring: the feasibility of your long-term plan and closing the "value gap" (e.g., your target value minus your current market value).
As time goes on, your value gap ideally should decrease (all else equal). However, this may not be the case. Your business may grow exponentially faster than expected, or your business may have an off-year. Either way, it is essential to revisit your Exit Model to ensure your plan is on track.
How Often to Revisit your Exit Model?
Noticeable changes to value are often not seen daily. However, value creation is the culmination of the day-by-day, week-by-week, and month-by-month grind. While there are certainly exceptions to the rule (such as winning a profitable, large contract), we recommend revisiting your Exit Model once per year.
Just as the value of your business is everchanging, your financial position and willingness to run your business may change over time. Given this, revisiting the Exit Model once per year is essential to re-analyze the numbers. Is $10 million still my financial goal? Is a 10% growth rate sustainable, or do I need to revise my timeline to exit?
Value Scouts Annual Valuation
In addition to the points above, Value Scout performs an annual valuation update to reassess your current market value intended to align with the annual planning of your business and, if necessary, change your Exit Model.