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Appraisal/Valuation Services

An important step in assessing your business’ as well as your own financial well-being or in selling all or a portion of a business is the determination of its value. Whether for estate purposes, in anticipation of the establishment of an Employee Stock Ownership Plan, for a change of control transaction or for the protection of minority shareholders, a comprehensive valuation of the business is essential. A proper valuation requires an extensive review of a business’ financial history, the development of reasonable financial projections and a thorough examination of how the market is served and how the business performs relative to its industry and the overall market.

Fairness opinions are put together utilizing a broad range of methods. These include:

Complete review of all financial data

Quantitative analysis of cash flows

Quantitative analysis of accumulated assets

Analysis of comparable companies and similar transactions

Analysis of contributions

Fairness opinions are provided for a variety of purposes including:

Sale of a Business
In the case of a sale to an outside party, placing a realistic and attainable value for the business is essential. It is a critical step before the search is launched. Our Associates bring diverse and highly successful backgrounds within publishing, digital marketing, exhibition and conference management, out of home advertising, radio broadcasting and exhibition/conference management. We bring a unique understanding of the numbers and the ability to look beyond the operation itself. We track national as well as regional and local markets every day, know who the movers and shakers are; who the potential suitors may be and what transaction value your target operation may bring. In addition, we carefully track similar transactions offering sellers the comparable transaction data this is critical in placing a value on the business.

•  Due Diligence Support Services for Mergers and Acquisitions
Buyers have come to rely on our expertise in providing an objective analysis of what properties are worth and an objective opinion of what the benefits of the combination may be. The bottom line- M&A’s that do not create value more than the aggregation of the two separate organizations should not be undertaken. Distinguishing combinations that will create incremental value is a task that requires both insight and analytical skill. Our comprehensive due diligence services go well beyond the numbers. We carefully examine the target markets and opportunities for growing those markets, competitive factors that may influence those markets down the road, personnel and production issues while taking a good hard look at how the operation may fits. We’ll identify those items, particular to that company, which may affect its ability to make money.

Valuations for the Purpose of Establishing an ESOP

ESOPs have many advantages. One of the more distinct advantages is that it allows an owner of a closely held firm to withdraw cash from the business without giving up control of the firm while deferring taxes on capital gains. In order to establish an ESOP, a value on the business must be placed, since it is the ESOP that will buy a percentage of the business from the owner.

Valuations for Estate Planning

Valuing a closely held business is a mix of the subjective and the objective. True, there are a number of commonly accepted methods for valuing a business. These include: the multiple approach, income capitalization approach, discounted cash flow approach, and net asset value approach. Each approach has its own strengths and weaknesses. The object is to determine what a willing buyer would pay a seller for the assets of that business. Yet, unlike their public company counterparts who are actively traded in the marketplace, closely held companies typically do not have values regularly established. To calculate the value of a closely held company, the appraiser must use both financial theory and practical experience. The appraiser must look at markets conditions as well as the numbers while taking into consideration intangibles such as key personnel, buyer activity, and the economy as a whole.

Establishing Fair Market Values as Part of an Owner Buy-Out Agreement

Companies that are owned by several principals typically enter into fair value buy-out agreements at some point during their early growth years. Under these agreements, the business will purchase a principal’s share at fair market value.

Agreements can be triggered by many factors including a principal’s desire to retire or simply disassociate him or herself from the business, a principal passes away or suffers a disability, or even disagreements over how the business is to be run. The primary issue typically focuses on what is the fair market value and who makes that determination. And, in most cases the business is valued from the perspective of how much it would bring in a sale. This can be a very contentious negotiation; one in which it helps to have an expert third party opinion.

An appraiser will look at the numbers and the personnel behind those numbers, the market as a whole, competitive factors, and business trends. He can make assumptions on where the business is headed, who the logical suitors may be or if there would be any suitors at all, and what resources might be needed to grow the business. A Buy/Sell agreement that is clearly established, prior to the time of need, and with a structured set formula for determining value will consistently provide an accurate determination.

•Valuation of Restricted Securities

Restricted securities are those shares or ownership positions that contain important restrictions on the ability of the holder to sell or exchange those securities. Restrictions limit the marketability of the security and their values are generally below those of non-restricted counterparts. The amount of the discount varies depending on the circumstances. Discounts typically range from 10% up to 75%, sometimes even higher.

 

Contact Us Now. Phone (301) 253-5016 for a confidential review of your own situation or click here  to contact your regional associate.