Business Valuation

Business valuation is a process that allows the business owner, shareholder or investor to determine the fair market value of a business or business interest, whether it is on a controlling (majority) or non-controlling (minority) basis.  A business valuation helps identify the key value drivers of a business and ultimately contributes to increase shareholder value.  There are different reasons for conducting a business valuation including, but not limited to:

  • Economic (you need debt or equity financing for expansion due to cash flow constraints)
  • Sale (merger or acquisition by a third-party)
  • Personal (retirement, death, divorce or health related)
  • Legal (Buy/Sell agreement, purchase agreement)
  • Litigation (commercial disputes, economic damages)
  • Strategic (transaction among shareholders, fairness opinon)
  • Financial reporting (goodwill impairments)
  • Other (IRS or tax related)

Regardless of the reason, there are three commonly-accepted valuation methodologies to compute the enterprise value: asset, income and market approach. The methods to apply will vary upon the purpose, scope and intended use of the valuation.  The main factors affecting the enterprise value are:

  • Revenue growth
  • Operating cash flow
  • Cost of capital
  • Management team
  • Clients
  • Intellectual property
  • Goodwill

Based on the client needs, we provide two types of reports: calculation and valuation report.  The calculation report does not incorporate all of the procedures required in a valuation report and both the client and valuation professional must agree upon beforehand on the approaches and methods used as well as the extent of procedures to apply in such engagement.  A calculation of report is not suitable for litigation, IRS purposes, or valuations for government guaranteed loans, such as SBA-guaranteed loans.

A valuation report results in a conclusion of value which is basically an opinion on the value of the business or ownership interest.  It is a more in-depth analysis and the valuation professional must apply all required approaches and methods deemed appropriate under the circumstances. The valuation report requires more procedures and a a more detailed analysis making the engagement more time consuming than a calculation of value

We are certified by the National Association of Certified Valuators and Analysts (NACVA)® and have over 15 years of experience conducting business valuation reports in multiples industries such as technology, financial services, media,  healthcare, distribution/logistics and retail among others.  Our services

Contact us to discuss how a business valuation can help you make the right decision.