Strategic Business Valuation

Standard Practice

Whether by bank policy or SBA requirements, it is standard practice to get an SBA valuation of the target business to aid in the process when underwriting a loan for the acquisition of an existing business.

Risk of Default

Banks want an SBA valuation that considers both going-concern and liquidation value to protect against default risk. Both acquirers and banks want a valuation that accurately assesses the full business value.

Understanding the Business

A valuation firm should have great understanding of the business and/or assets being valued to determine appropriate SBA valuation techniques and underlying assumptions.

Thorough and Thoughtful Approach

An SBA valuation report must have an easy to understand analysis with well documented and supportable assumptions. The firm should also assess the value of both tangible and intellectual property.

Give Fiduciaries Comfort

A fairness opinion brings an independent third party to the table to offer an opinion on the fairness of a transaction to all shareholders. Fiduciaries (boards and trustees) face a difficult responsibility made more difficult by the risk of shareholder lawsuits. Fairness opinions demonstrate proper due diligence.

More Than Just a Valuation

A fairness opinion is more than a valuation; it goes far beyond the instant economic value of the transaction. Additional assessment and observation of the key factors and context surrounding the transaction enable stakeholders to proceed with grounded confidence.

Purposes for Fairness Opinions

Fairness opinions are most commonly performed for merger and acquisition transactions and employee stock ownership plan transactions. Our analysts have worked on multibillion-dollar transactions and are ideally prepared for providing detailed fairness opinions on transactions of any size.

As either a participant in a merger and acquisition transaction or as the trustee of an employee stock ownership plan with a fiduciary duty to fulfill, the best practice is to engage an independent appraisal firm that has been on both sides of the table and has a deep understanding of stakeholder interests.

Purchase and Sale of Ownership

A clear, mutual understanding of the provisions surrounding the purchase and sale of ownership between both the buyer and the seller is critical to avoiding future misunderstanding, contentious negotiations, or other unwanted circumstances or mistakes.

Method for Determining Value

A good agreement has a fair, logical method of determining value. Quality agreements involve an independent, mutually funded third-party valuation. These can be done EITHER at the time of a triggering event OR upfront to provide an ongoing method that multiple partners can use.

Predetermined Courses of Action

Nobody goes into a partnership expecting problems, but failing to plan can be the source of many unexpected issues. Clear and easily followed ground rules determined upfront help make the purchase or sale of ownership stakes a much less contentious and simpler process.

Transferring Shares and Voting Power

The agreement between the buyer and the seller should also address important items such as the means of payment, who the shares may transfer to, and the possible impact it may have on voting and/or power post-transfer of ownership (for example: shares passing to an heir).

Marital and Separate Properties

Separate property becomes marital property under three types of circumstances: 1) it’s sold/transferred, 2) it appreciates in value, or 3) when it’s comingled with marital property. This can be confusing, which is why we’re here to help.

Valuing a Business or Practice

This process takes many factors into account, including tangible and intangible assets as well as the earning potential of the asset. In most cases, the business value will be determined by fair market value, but other valuation methods are sometimes employed when required.

Valuing Other Property and Assets

Our job includes determining what needs to be valued in the distribution. This can range from real estate and personal household property to stocks, bonds, and retirement benefits. In all this, we serve as your guide to a smooth and seamless process.

Independent Opinions for Buyers and Sellers

We have experience providing independent opinions for strategic purposes. For buy-and-sell opportunities, when looking to obtain an independent party, hire an experienced firm with no vested interest in your chosen course of action—only in your success.

Management Buyout

Every business owner seeking to sell his or her company should move forward with a valuation of the enterprise. This valuation provides a more accurate perspective, overall direction, and an idea of the fair market value of your company.

Fundraising

Before you begin fundraising for your company, it’s important to get a valuation. This helps determine how much cash you need, gives you an idea of the potential of your business, and gives you more credibility (especially if you use a third party).

Strategic Planning Purposes

Our team of ex-CFOs, experienced investment bankers, and expert analysts provide valuation services that apply to your company’s strategy. We keep the overall picture in mind when valuing and consulting for strategic purposes.

Shareholder Distributions

Before you make a distribution, you need to be aware of the tax and financial consequences. Our deep industry knowledge, access to data sources, benchmarks, and tax rulings help us provide comprehensive reports at the highest quality.

Recapitalizations

A recapitalization can be advantageous by freeing up cash flow, providing liquidity to owners, and providing resources to execute the company’s strategy. We have experience with recapitalizations that include debt, equity, and dividends and can share the pros and cons of various structures.