Determining the Value of Your Business
Understanding the realistic and achievable market value of your business is of major importance when considering a sale. It’s important to make sure you get the highest price for your business, but equally important that you don’t overprice your business and scare away otherwise interested buyers.
Privately held companies typically do all of their accounting to avoid paying taxes. Consequently, their tax returns often show that they’ve made little or no profit. As a business owner, you know that tax returns don’t necessarily reflect the fact that the business has been providing you a comfortable living. That’s why your business’s financials need to be recast (or “normalized”) to communicate the true story to perspective buyers.
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Sunbelt eBusiness Advisors will work with you to analyze your financial, marketing and operational data, then transform it into an organized financial picture - with an emphasis on determining the fair market value of your company. We will present the company's value in commonly accepted and concise terms that buyers and lenders can readily understand and benefit from.
In reviewing a company's financial statements, it 's often necessary to include analytical adjustments that may include the following:
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Pricing fixed assets at current market value - not historical book value
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Adjusting book depreciation where it is not a true reflection of economic depreciation
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Making inventory adjustments when necessary
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Normalizing owner/executive compensation and fringe benefits
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Reviewing non-recurring and non-cash expenses, along with non-transferable interest burden
These and other adjustments are made to the financial statements, thereby providing an accurate understanding of the recast earnings, which play a major role in properly assessing the value of your company.
By understanding the various operational elements of your company, we are able to assess the relative impact of its opportunities, and its perceived risk. Elements that increase risk decrease the value of the business, and conversely, elements that decrease risk increase value.
The following are examples of qualitative factors that are analyzed: years in business, pagerank and traffic statistics, proprietary content, industry life cycle, industry stability, relative size within the marketplace, customer base concentration, supply source concentration, product differential, strength of market, size of market, management quality and tenure. Additional concentration is placed on financial forecasting models, industry analysis and examination of comparable industry transactions.
Our goal is to provide you with a true picture of your business’s value - in a format that can be easily understood by all parties.
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