Valuations

A solid understanding of a company’s value is the foundation for much of the planning related to buying, operating or selling a business. The current value of a business is a benchmark for operating a business. And the value for a closely held company is the source of financial security for owners. And, of course, it is the key to determining if a business can be profitably sold or acquired.

KEYSTONE can provide a no obligation Marketability Assessment pertaining to the current value range for selling your business. This assessment of value provides a value range based on historical financial information and industry guidelines coupled with our “real time” knowledge of current M&A market conditions. Our Marketability Assessment can be the basis for deciding whether you want to offer the business for sale.

An objective, professional third party valuation can be especially important. Realistic, objective assessment of a business provides guidance to both the business seller and an acquirer. KEYSTONE has relationships with professionals that provides benchmark data, assessment of market conditions within an industry, the general market within a region, and expert opinion as to fair market value. A professional valuation draws on extensive information on transactions involving similar companies. A professionally prepared in-depth third party valuation is required in some circumstances.

The maximum value of a business comes when there is a special fit “synergy” between two companies. An assessment of the businesses together will often indicate value that exceeds an independent assessment of each business independently. Keystone can help regardless of what type of valuation is best suited for your situation.

Please Consider:

• What does a professional valuation do?

• Why conduct a professional valuation?

• What type of valuation is needed?

• Who to consider for a professional business valuation?

WHAT DOES A PROFESSIONAL VALUATION DO?

An objective, professional business valuation provides solid data to key owners. A business valuation professional can provide advantages. It should:

• Assure confidentiality - protect your personal and financial interests.

• Give qualified assessment of Fair Market Value, book value, or investment value. Even cash flow analysis can be very different from the true fair market value.

• Provide expert information - you can have confidence that the valuation is thorough and complies with accepted standards of professional practice.

• Give industry insight – the use of in-depth data sources provides comparisons of key performance factors, and shows how a given company performance might be viewed. This provides insight on comparable transaction values, and performance changes that might impact company value.

• Deliver Qualified Valuation Staff - certification provides added assurance that the valuation analyst meets high professional standards and recognizes the need for specialized valuation knowledge and training.

• Defend for Potential Litigation - a complete and thorough valuation reduces questions and ambiguities. This is especially true in contentious situations where solid information will reduce exposure to legal repercussions.

• Provide Third-Party Objectivity - most problems in business valuations arise from questions of independence and credibility when performed by biased advisors and where personal and emotional issues influence decisions.

WHY CONSIDER A PROFESSIONAL VALUATION?

Assessing business value can be an important tool for successful operations and for effective preparation for a business transaction. Objective understanding of a business and how it compares with similar companies in the industry allows key executives to emphasize improvements and enhance overall value. When contemplating a change in ownership and control, an objective valuation provides guidance to current owners, to prospective owners, and for any debt holders. An effective valuation will include sophisticated calculations, ratio analysis, industry comparisons, economic and market analysis, relative business risk assessment, and other considerations.

When valuing a business it is important to have the assurance that the services you receive consider all the relevant information and facts so that you get the full economic benefit you deserve. Using a qualified business appraiser will give you confidence, peace-of-mind, and the advantage of knowing you are working with solid information for improved operations, or for a change in business ownership.

WHAT TYPE IS NEEDED?

The value of a company depends on the type of operation or change being considered. The degree of control, the portion of company ownership involved and the purpose for valuation all have a significant impact on its value. In addition, a company might represent strategic value that substantially differs from Fair Market Value.

Special circumstances call for special valuations. Change in ownership, contingency planning, and recapitalization frequently calls for an objective valuation. A trained and qualified valuation professional will assess the need and provide services to meet individual and business valuation requirements.

WHO TO CONSIDER FOR A BUSINESS VALUATION?

When considering a business valuation, you should take care to choose the qualifications and experience to deliver what you require. Here are some important qualities to seek:

• Confidentiality and discretion

• Reputation and trust

• Expertise in business transactions and valuations

• Certifications and credentials

• Access to objective data on transaction values, by industry, region, and business size

Your Keystone advisor can answer any questions you may have regarding business valuations and your unique circumstances.