1 / 18

How to Value a Business: A Buyer’s & Seller’s Perspective

How to Value a Business: A Buyer’s & Seller’s Perspective. Darren Miles, CBV April Reilly, Assante Wealth Management. Fair market value  definition.

kiayada-gutierrez
Download Presentation

How to Value a Business: A Buyer’s & Seller’s Perspective

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. How to Value a Business: A Buyer’s & Seller’s Perspective Darren Miles, CBV • April Reilly, Assante Wealth Management

  2. Fair market value  definition The highest price available, in an open and unrestricted market, between informed and prudent parties, acting at arm’s length, under no compulsion to act, expressed in terms of money or money’s worth.

  3. Why find out what your business is worth? Life events * Shareholder dispute Tax efficiency * Benchmarking * Capacity Optimize value * Business events Shareholder agreements * Estate freezes Disability * Team building * Divorce Death * Corporate reorganizations Buy and sell a practice

  4. Key factors in valuation of goodwill Ensure the value of the goodwill is Trustworthy • Transferability • Replicability • economic Utility • Sustainability • Transparency

  5. Three critical thresholds

  6. Business considerations – regulatory landscape

  7. Business considerations – leveraging technology • Artificial Intelligence, robo-advice • Security and the cloud • Outsourcing

  8. Business considerations – team dynamics Blackhawks sign Jonathan Toews, Patrick Kane to eight-year extensions ''It's about the process, but in the end, it's about scoring.''

  9. Business considerations – changing demographics

  10. What are the benefits of executing a valuation? • Maximize the value of your business. • Build a solid foundation. • Prepare you for the eventuality of a transition.

  11. Service industry valuation metrics • Discounted cash flow  preferred method • Identify a baseline • Goodwill • Buyer beware

  12. Tying it all together • Triggering events • Weighting (current environment) • Discounted cash flow – 90% • Market comparative – 10% • Debt retirement analysis • Ideally have buffer cash flow position

  13. Structuring a deal • Sequential buy-in versus 100% equity event • Vendor take-back versus earn out, i.e. financing • Asset versus share deal • Post-transaction consulting agreements

  14. factors for an optimal valuation TOP 5 • Lead time: 5 to 10 years. • Think of your business as “a business” versus “a book.” • Understand critical thresholds: $300,000, $1 million, $2 million. • Implement and document a process and structure. • Sustainability and replicability of the revenue stream. By understanding what your valuation is and having it documented, you can limit negotiation with potential buyers when discussing what your practice is worth.

  15. Key points • Valuation methodologies • Tax treatment • Payment structures • Agreements and documentation • Value drivers and value detractors

  16. Thank youFOR ADVISOR USE ONLY  NOT FOR DISTRIBUTION TO CLIENTS This communication is published by CI as a general source of information and is not intended to provide personal legal, accounting, investment or tax advice. Facts and data provided by CI and other sources are believed to be reliable when posted; however, CI cannot guarantee that they are accurate or complete or that they will be current at all times. CI and its affiliates will not be responsible in any manner for direct, indirect, special or consequential damages howsoever caused, arising out of the use of this presentation.

  17. Checklist handout • “Institutionalizing” or improving these areas can positively impact the discount • rate which is used to determine the franchise value of your business

  18. High impact valuation areas – Before and after case study

More Related