BUSINESS VALUATION

Our valuation services are comprised of professionals with specialized expertise who dedicate their time and talent to valuations. That focus, plus ongoing involvement in industry and professional associations, assures we can offer the most accurate information to make the right decisions.

1. Preparing for the sale or transfer of your business
2. Planning for estate liquidity
3. Making a gift to a family member, a friend or charity
4. Correctly recognizing the business’ worth in a pre or postnuptial agreement, or a marital dissolution
5. Ascertaining worth for loan collateral purposes
6. Performing a “fiscal checkup” to test the financial health of, or trends in, the business
7. Buy-out due to death, disability, retirement, or the sale of an interest in the business to a third party

There are many reasons why a business owner might need or want to value a closely-held business, such as

All relevant approaches, such as asset, income, and market, are considered when a valuation is conducted. We follow a comprehensive due diligence process, which includes conducting onsite interviews, performing industry and competitor research, and examining company-specific and other relevant factors.

Critical Factors

Critical factors to consider in business valuation include – in order of importance:

1. Nature and history of the company: How risky or stable is it? How strong is its management?
   • How diverse are its operations?
   • Is it growing or shrinking?
   • What significant events have shaped its past or could shape its future?
2. The economic outlook in general and for a specific industry:
   • What’s happening in the general economy?
   • What’s happening in the specific industry?
3. Book value:
   • To what extent is book value misleading?
   • How asset components are adjustments properly bring it to fair market value?
4. Earnings capacity:
   • What is the business future income potential?
   • How salaries, travel, and entertainment expenses, non-recurring items, potential legal or tax liabilities are adjusted?
   • Are there shareholder loans that are disguised dividends because they are equity rather than debt?
5. Dividend-paying capacity:
   • What do cash flow projections show?
6. Goodwill:
   • What level of earnings over normal expected return can be reasonably projected?
7. Sale of stock:
   • Have there been recent sales?
     • If so, at what price?
   • Under what conditions and to whom was the stock sold?
   • Have there been events since the sale that significantly affect the value of the business?

Nainesh Shah, CFA
Partner
A Chartered Financial Analyst and portfolio manager with 25 years experience, he is a member of the CFA Institute and has presented to over 100 audiences of financial advisors and non-profits on macroeconomic conditions, capital markets, portfolio construction, and risk management.