Frequently Asked Questions

What are the Three Valuation Approaches?

1. Income Approach

Earnings is discounted to arrive at a valuation amount

2. Market Approach

Compare subject to similar businesses that have been sold

3. Asset Approach

Evaluating the asset and liabilities on the books, most of the time used as the "floor" value of the company

Benefits of knowing your Business Value?

1. Better understand your Business Potential

2. Target Areas for Improvement

3. Minimize Value Gap

4. Enhance Due Diligence in Preparation for Sale

5. Properly plan for Retirement

6. Prepare for taxable events such as Gifting or Grants

What are the Key Elements of an Evaluation?

1. Purpose of Evaluation

2. Evaluation Date

3. What is being evaluated?

Company Shares, Company Assets, Intellectual Property

4. Financial Information (at least 3 years)

5. Risks of the Entity

5. Projected Growth

What are the Elements to Maximize Value?

1. Predicable Profits & Cash Flow (Dimension 1)

2. Predictable Revenue Growth (Dimension 2)

3. Predictable Equity Value (Dimension 3)

What are the 18 Drivers of Operational Performance?

Market Drivers: Growth, Recurring Revenue, Product Differentiation, Large Potential Market, Barriers to Entry, Brand, Dominant Market Share, Customer Diversification, Margin Advantage.

Operational Drivers: Company, Operations, Human Resources, Financial, Customer Satisfaction, Legal, Sales & Marketing, Senior Management, Innovation

Advantages of Exit Planning?

1. De-risking

2. Higher Valuation

3. Flexibility in timing your Exit

4. Tax Minimization