Considerations For Valuation
Product |
Description |
Cost |
|
|---|---|---|---|
| SNAPSHOT | Small Business report for sales <$350,000. . . more info below | $695. |
|
| VALUE ANALYSIS | Discretionary Cash Flow Report (45 pgs) . . . more info below | $1595. |
|
| LIMITED FORMAL | Formal Valuation with detailed review (75pg). see below | $3806. |
|
| COMPREHENSIVE - M & A | USPAP report: Companies with EBITDA > $1 mil . . . more info | $9,500. |
|
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1. Snapshot Valuation
The Snapshot Valuation is a restricted use valuation report intended for small main street businesses with sales of less than $350,000. We suggest using this opinion of value for businesses that are commonly listed and sold such as tanning salons, dry cleaners, restaurants, and auto repair, etc. The report is approximately 16 pages and provides only a brief synopsis of how the valuation conclusion was determined. The basis of this valuation is a market comparison with like companies within an industry.
2. Main Street Value Analysis
The Value Analysis is a restricted use business valuation designed specifically for the "Main Street" company with sales of $1,000,000 or less. The report is intended for "asset sale, financial buyers" and is approximately 45 pages providing only a summary of how the valuation conclusion was determined. The basis of this valuation is discretionary cash flow, since most Main Street businesses are bought and sold on a multiple of cash flow. The value considers primarily historical and current financial performance and very little time is spent with the Balance Sheet. The report contains the following (partial list of exhibits):
- Historical Income Statement
- Adjusted Cash Flow Statement
- Company Description & General National/Regional/Industry Economic Data
- Comparable Sales (Market Approach)
- Various Graphic Analyses
- Summary Review of Each Valuation Approach
- Valuation Conclusion and Justification
3. Limited Formal Valuation
The Limited Formal Valuation is a restricted use business valuation intended for the standard small business with sales between $1,000,000 and $8,000,000. The report is intended for "asset sale, financial buyers" and is approximately 75 pages providing a detailed review of all aspects that were considered in determining the final valuation conclusion. The bulk of the report is financial analysis and the valuation conclusion is supported on much more detail. In addition to reviewing the company's historical and projected earnings, the report also contains a detailed review of the Balance Sheet.
The report contains the following (partial list of exhibits):
- Historical Balance Sheet and Income Statement
- Adjusted Cash Flow Statement
- Company Description and SWOT Analysis
- Complete Financial Statement Analysis
- Common Size Analysis
- Ratio Analysis and Industry Analysis
- More in Depth Economic and Regional Information
- IBISWorld Industry Report
- Comparable Sales
- Detailed Description of Each Valuation Approach Considered and Used
- Summary Review of Each Valuation Approach
- Valuation Conclusion and Justification
4. Merger & Acquisition Valuation
The Merger & Acquisition Valuation is a comprehensive business valuation for strategic Mergers & Acquisitions and is developed in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). This is a common equity valuation and is intended for any business that generates consistent EBITDA of $1,000,000 or more or any business looking to determine less than l00% of ownership. The basis of the valuation is focused on future earnings and the selection of guideline companies comes from both the private and public markets. This report is a completely customized report and the number of pages can range from 30 to 200 depending on the information that is used to support the conclusion.
The Valuation Process
1. Determine what type of valuation is required.
2. Completion of the Company Profile information needed for the type of valuation selected.
3. Once the Company Profile has been completed and the financial documents obtained, the package of information is mailed, faxed, or emailed to us.
4. The third party Valuation Analyst will review the documents and begin the valuation. During this process, if the Analyst has any questions or requires additional information, he will contact you to obtain them.
5. The valuation process for a Snapshot, Value Analysis, or Limited Formal will take 5-10 business days once we have the required financial information, a completed Company Profile, and all questions have been answered. The M&A and all Comprehensive reports will take 4-6 weeks due to the complexity of the valuation.
6. At the 5-7 business day timeframe, the Analyst will issue a preliminary review of the valuation. This review is crucial to the final report. It assures that all details have been considered and allows for any adjustments that may need to be made based on new information or further clarifications.
7. Once the review with the Broker has been conducted, the Analyst will finalize, print, and mail the final valuation report.
8. You will receive one hardcopy of the final report. Packages are typically shipped for a 2 day delivery. Overnight deliveries and extra copies are offered for an additional cost.
Uses for a Business Valuation
Many events may trigger the need for an independent valuation:
1. Provide Fair Market Value of a Business as of a Specific Date in Time.
2. Annual "business check-up" for business owners to determine financial strengths and weaknesses.
3. Benchmark comparison for business owners to determine how the business is operating compared to other similar businesses in the same industry (regionally and nationally).
4. Acquiring expansion capital through lending institutions and venture capitalists.
5. Business Planning and Value Enhancement - Determining the present value of a business and setting goals over a period of time to increase that value.
6. Valuing company stock for the development or annual review of an employee stock option program (or bonus stock option plan)
7. Retirement planning
8. Merger or Acquisition (Buying or Selling a Business)
9. Planning for an initial public offering of stock
10. Conducting a major strategic-planning initiative
11. Seeking outside investors
12. Disputing conclusions of an IRS audit
13. Doing estate or gift planning that involves company stock
14. Creating a company stock-option plan or other benefit plans
that involve company stock (such as ESOP or ESOT)
15. Breaking up a partnership (Partner Buyout)
16. Getting a Divorce
17. Entering Bankruptcy
No endorsement or recomendation is made or inferred by 1% Business Brokers® regarding services of the third party providers listed on this page. Interested parties should conduct their own diligence.
