Business Valuation

In order to sell or purchase a business, bring in new owners or partners, or place a value on a business for insurance or estate planning purposes, you need to know what it is worth.

We provide comprehensive business valuation by using industry standards to value your business. The resulting documents provide comfort with you knowing that it was completed in a professional manner and that the resultant figure represents a fair and accurate value.

Business Valuation Steps

• Step 1. Establishing and defining the client-advisor relationship.
• Step 2. Gathering data, including documentation such as accounting records and tax returns.
• Step 3. Analyzing free cash flows, assets, and income.
• Step 4. Applying valuation methodology and testing.
• Step 5. Determining fair value of business using industry standard practice.
• Step 6. Making recommendations.

Step 1: Establishing and defining the client-advisor relationship

Before a business valuation can be initiated, we need to discuss with the client the scope of the engagement, time involved, and to determine whether enough data is available to make a fair valuation. We explain what work needs to be done, the terms and conditions, and any limitations there may be. This is a collaborative process.

Step 2: Gathering data, including documentation

Before any valuation can be performed, we must gather and assemble the data in which we can then use to make a determination. In this step, we gather data such as:

• Certified audits (if completed)
• Last three years of tax returns
• Business income statement
• Business assets or balance sheet
• Business cash flow (if available)
• Bank loans and borrowings
• Buy-sell agreements
• Real estate
• Tax liabilities
• Pension or retirement plans

The data gathering stage is extremely important because without good data, an informative and fair valuation cannot be made.

Step 3: Analyzing free cash flows and assessing assets, income, and liabilities

Since many business valuations are based on cash flow, we need to get an accurate picture of cash flows during a multi-year period. In most cases, we can get the information needed from accounting records and tax returns. However, without the above mentioned records, it becomes very difficult to measure cash flow.

Step 4: Applying valuation methodology and testing

Industry standards disclose that we apply at least three different valuation measuring techniques and weigh them. Once the analysis of cash flows is compiled, we can begin to value your business using accepted industry standards. Using industry standards is extremely important because a business valuation must fairly represent the true value of the business and the resulting document needs to stand under examination or scrutiny.

Step 5: Determining fair value of the business

Once the business valuation has been completed according to industry standards, those valuations must be compound and tested.

Step 6: Making recommendations

We discuss and deliver to the client our valuation report, which is comprehensive and prepared to industry standard specifications so that the resulting valuation document can be used for its intended purpose in giving the client a live picture of a fair valuation. We thoroughly explain and discuss the valuation process and our reasoning.