Business Valuation

Business valuations are essential for:

• To support buy/sell agreement among business owners and their widows
• To support estate tax valuation when ownership passes without a buy/sell redemption agreement
• To support negotiations between outsiders and owners in an arm-s length sale
• To properly plan succession planning in the case of passing down a family owned business

• Earnings streams historically
• We measure the strength of earnings streams
• We look at environmental and economic factors and the business's responsiveness to these
• We examine why the business is successful, who the valuable players are in its management, and how vulnerable it is to sudden changes in the mix of managerial teams
• We evaluate the business's competitiveness; we look at its competitors; we look at its long-range and short-range managerial plans; we look at how it responds to its competitive environment
• We consider the industry and the factors that impact its future
• We evaluate the build-up of good will and consumer perception
• We look at the image the business in presenting and building
• We examine risks
• We look at trends; if the business is not growing, we look for counseling opportunities with management to stimulate additional evaluation
• We examine potential markets for a sale (even though not in the immediate offing) and the anticipated price that sale would bring
• We examine the status and condition of its productive assets. We weigh that against debt. We look at state-of-the-art and evaluate where the company is compared to its competitors
• We examine the productivity of the sales force
• We evaluate insurance and loss insurance.
• We examine working capital and cash flow
• We look for negative good will (stock outs, sales tactics, product support or lack thereof, etc.) for counseling opportunities with management.
• We look at management styles, price control, monitoring of cost centers, and incentive programs.

• The buyer
• The seller