Why technology is now a valuation essential

If you’re a business owner or CEO still treating technology as “just a tool”, you’re already falling behind. Today, enterprise value (EV) is no longer just shaped by revenue and margin, it’s determined by how tech-enabled, scalable, and future-proof your business model is. Investors and acquirers are looking under the hood If they find a traditional, manual operation with no clear tech roadmap, they’re walking away or knocking your valuation down. Mercury explains.

Why technology drives EV

A tech-enabled organisation with a well-implemented technology strategy can lead to increased efficiency, innovation, and new revenue streams, all of which can positively influence your company’s overall worth.

And when it’s time to exit or attract funding, investors view the technological capabilities of your company as critical indicators of your company’s future success, evaluating factors like adaptability, operational efficiency, scalability, and data-driven decision-making capabilities.

The cost of inaction

Companies lacking clear technology strategies face declining competitiveness, reduced efficiency, higher operating costs, and significant challenges in attracting and retaining talent. Kodak is an example of this. Despite inventing the digital camera, they largely ignored it, preferring to hold on to traditional business models and eventually filed for bankruptcy.

By holding onto traditional recruitment models, you may be at risk of becoming the ‘Kodak’ of the staffing industry – holding onto outdated methods while tech-enabled competitors leverage technology to improve their competitive edge further.

Tech as a multiplier

Look at what Microsoft achieved under Satya Nadella, a complete reinvention by pivoting to cloud, AI, and platformbased thinking Amazon? The same story.

These are proof that when technology moves from being a backend tool to a core strategic driver that helps you deliver your service in an improved or different way, valuation follows.

Recent private equity acquisitions in Australia show a clear preference for techled staffing models with that operational leverage built-in.

What investors and buyers are really looking for

When PE firms or acquirers evaluate recruitment businesses today, they ask:

• Is the business reliant on consultants?

• Is growth linked to headcount; or scalability, and data?

• Is there a clear tech stack driving operational efficiency?

• The businesses that tick these boxes get the valuation premiums

Profits Driven by Technology

By making tech adoption core to your business strategy, you can potentially demand a higher EV through better scalability, increased operational efficiency, reduced costs and higher profitability.

To learn more about how Mercury is helping recruitment business increase EV: https://wearemercury.com/