Identification of businesses with potential to achieve superior revenue growth and financial performance

• US 8,255,306 B1
• Filed: 10/14/2009
• Issued: 08/28/2012
• Est. Priority Date: 11/21/2003
• Status: Active Grant

• Current Assignee: Tom Schaff
• Original Assignee: David G. Thomson
• Inventors: Thomson, David G.
• Primary Examiner(s): Dixon, Thomas
• Assistant Examiner(s): Fields, Benjamin S
• Application Number:
  US12/579,147
• Time in Patent Office: 1,049 Days
• Field of Search: 705/35, 705/38
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes

Abstract

A method of identifying target businesses with above-average potential to achieve a selected financial performance target, in accordance with the principles of one embodiment of this invention comprises identifying a plurality of model businesses which have already achieved the selected financial performance target; identifying financial statistics common to the identified model businesses; and screening target businesses for the financial statistics common to the identified businesses. The financial statistics preferably include: at least one of historic annual sales, annual sales growth rates, and time since found to exceed selected annual sales thresholds, gross margins, SG&D, R & D expense, EBIDTA, cash flow from operations, market capitalization.

Claims

1. A computerized method comprising:

identifying a plurality of businesses which have achieved a selected financial performance target of $30 million to $70 million in annual revenue;

identifying financial revenue growth rate statistics for each of the plurality of businesses to screen for exponential revenue growth companies, based upon data for the identified businesses obtained from financial databases;

determining exponential revenue growth trajectory curves from the revenue growth rate data for the identified businesses using a computer, to identify an inflection point in the revenue growth trajectory curve for each business that is indicative of where annual revenue is in the range of $30 million to $70 million;

determining an exponential equation defining a maximum curve for a mean 4 year trajectory of revenue growth to $1 billion in revenue, and an exponential equation defining a minimum curve for a mean 12 year trajectory of revenue growth to $1 billion in revenue, using a computer; and

screening target businesses that have at least $30,000,000 in annual revenues based on the revenue growth rate data for the identified businesses, wherein screening comprises identifying an inflection point in the determined revenue growth rate trajectory curve from which the business'"'"'s revenue growth can be normalized, and selecting target businesses, based on the revenue level and revenue growth rate data for each business, by using a computer to determine which of the identified businesses have revenue growth rate trajectory curves that fall within the bounds of the minimum and maximum curves for achieving a forecasted revenue growth to $1 Billion in revenue within a predetermined timeframe of between 4 and 12 years from the time of the inflection point in the businesses'"'"' revenue growth trajectory curve; and

outputting a list of the target businesses selected by the above screening as having above-average potential to achieve a selected financial performance target of $1 Billion in revenue within the predetermined timeframe.

2. The computerized method of claim 1, further comprising the step of selecting one or more of the identified target businesses for inclusion in an investment fund.

3. The method according to claim 2 wherein each target business has at least 30% annual sales growth.

4. The method according to claim 3 wherein the each target business is less than seven years old.

5. The method according to claim 1 wherein the plurality of businesses are comprised of privately owned businesses.

6. The method according to claim 1 wherein the financial statistics include at least one of historic annual sales, annual sales growth rates, time since found to exceed selected annual sales thresholds, gross margins, SG&

A, R&

D expense, EBIDTA, cash flow from operations, market capitalization.

7. The method of claim 1 wherein the step of selecting target businesses includes identifying those target businesses whose trajectory curves determined from revenue growth rate data fall between the maximum curve for a mean 4 year trajectory of revenue growth to $1 billion in revenue, and the minimum curve for a mean 12 year trajectory of revenue growth to $1 billion in revenue, wherein the maximum curve for a mean 4 year trajectory of revenue growth to $1 billion in revenue is defined by the equation:

Y=86.45x²−

206.31x+139.23, where y=revenue and x=time in years,

and the minimum curve for a mean 12 year trajectory of revenue growth to $1 billion in revenue is defined by the equation;

Y=25.313e^0.1926X, where y=revenue and x=time in years.

8. The method of claim 7 wherein the inflection point in the trajectory curve of a business'"'"'s revenue growth rate is a point where the business'"'"'s revenue is in the range of $30 million to $70 million in sales that provides for normalizing various business'"'"'s revenue trajectory curves relative to each other, and wherein the method further includes the step of normalizing the trajectory curve for the business'"'"'s revenue growth rate, for comparing the business trajectory curve to the minimum and maximum curves irrespective of time.

9. The method of claim 8 further comprising the step of selecting those identified target businesses for inclusion in various types of investment funds.

10. The method of claim 1 further comprising the step of determining an exponential equation defining a maximum curve for a mean 4 year trajectory of revenue growth to $10 billion in revenue, and an exponential equation defining a minimum curve for a mean 12 year trajectory of revenue growth to $10 billion in revenue, using a computer.

11. The method of claim 1 wherein the equation defining the maximum curve for a mean 4 year trajectory is an equation selected from the group consisting of an exponential equation, a logarithmic equation, a geometric-progression equation, and combinations thereof, where said equations are configured to yield a curve of compounded revenue growth from $30 million to $1 Billion within 4 years.

12. The method of claim 11 wherein the equation defining a second minimum revenue growth the minimum curve for a mean 12 year trajectory is an equation selected from the group consisting of an exponential equation, a logarithmic equation, a geometric-progression equation, and combinations thereof, where said equation is configured to yield a curve of compounded revenue growth from $30 million to $1 Billion within 12 years.

13. The method of claim 1 further comprising the step of segregating those identified target businesses whose revenue growth rate trajectory curves fall within a trajectory range for achieving a revenue of at least $1 Billion in a mean of 4 years from the inflection point in the revenue growth rate trajectory curve of the identified target business.

14. The method of claim 1 further comprising the step of segregating those identified target businesses whose revenue growth rate trajectory curves fall within a trajectory range for achieving a revenue of at least $1 Billion in a mean of 6 years from the inflection point in the revenue growth rate trajectory curve of the identified target business.

15. The method according to claim 1 further comprising the step of filtering out businesses that in the year in which annual revenues first exceeded $30,000,000, did not have an annual revenue growth rate of at least about 50%.

16. A system for identifying target businesses system comprising one or more computers configured to:

receive and/or provide data identifying a plurality of businesses which have achieved a selected financial performance target of $30 million to $70 million in annual revenue;

receive and/or provide data identifying financial statistics on revenue growth rate data for the identified plurality of businesses;

determine exponential revenue growth rate trajectory curves from the revenue growth rate data for the identified businesses, to identify an inflection point in the revenue growth trajectory curve indicative of where annual revenue is in the range of $30 million to $70 million;

determine a maximum curve for a mean 4 year trajectory of revenue growth to $1 billion, using an equation Y=86.45 x²−

206.31x+139.23, and a minimum curve for a mean 12 year trajectory of revenue growth to $1 billion, using an equation Y=25.313e^0.1926X, where y=revenue and x=time in years;

screen and identify target businesses whose revenue growth rate trajectory curves determined from revenue growth rate data fall within the bounds between the maximum curve for a mean 4 year trajectory and the minimum curve for a mean 12 year trajectory, and select those target businesses for inclusion in a list of target businesses, which are forecasted to have revenue growth to $1 Billion in revenue within a predetermined timeframe of between 4 and 12 years from the time of the inflection point in the businesses'"'"' revenue growth trajectory curve; and

output the list of selected target businesses as having above-average potential to achieve a selected financial performance target of $1 Billion in revenue within the predetermined timeframe.

17. The system of claim 16 wherein the one or more computers are further configured to segregate those identified target businesses whose revenue growth rate trajectory curves fall within a trajectory range for achieving a revenue growth to at least $1 Billion in a mean of 4 years from the inflection point in the revenue growth rate trajectory curve of the identified target business.

18. The system of claim 16 wherein the one or more computers are further configured to segregate those identified target businesses whose revenue growth rate trajectory curves fall within a trajectory range for achieving a revenue growth to at least $1 Billion in a mean of 6 years from the inflection point in the revenue growth rate trajectory curve of the identified target business.

19. The system of claim 16 wherein the one or more computers are further configured to segregate those identified target businesses whose revenue growth rate trajectory curves fall within a trajectory range for achieving a revenue growth to at least $1 Billion in a mean of 12 years from the inflection point in the revenue growth rate trajectory curve of the identified target business.

20. A computerized method of identifying target businesses, the method comprising:

acquiring data relating to financial statistics on revenue growth data for various publically traded businesses from data source provider;

screening the financial statistical data on publically traded businesses, using a computer and software, to determine which businesses have annual sales above a select financial performance target of $30 million to $70 million in annual revenue;

using a computer to determine a maximum curve for a mean 4 year trajectory of revenue growth to $1 billion, defined by an equation Y=86.45 x²−

206.31x+139.23, and a minimum curve for a mean 12 year trajectory of revenue growth to $1 billion, defined by an equation Y=25.313e^0.1926X, where y=revenue and x=time in years;

using a computer and software to identify an inflection point in a trajectory curve of the revenue growth rate for each identified business within the set, from which the identified business'"'"' revenue growth data is normalized for comparison to the maximum and minimum curve equations;

selecting from the set of identified businesses, using a computer and software, those businesses having revenue growth rate trajectory curves falling between the maximum and minimum curves, for inclusion in a list of target businesses, and

outputting a list of the target businesses, which are identified as being forecasted to achieve a revenue growth to $1 Billion within a predetermined time frame of between 4 years and 12 years from the time of the inflection point in the revenue growth rate trajectory curve for the target business, and identifying the listed target businesses as having above-average potential to achieve a selected financial performance target of $1 Billion in revenue within the predetermined timeframe.