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In a recent divorce
court judgment, the presiding judge ruled:
The Process of Business Valuations "In the end, a business is worth nothing more and nothing less that what a qualified
With the current state of the economy being what it is, there are actually more opportunities to buy or sell a printing business at a "fair market price" but before that can happen you have accept the fact that the suggested fair market price may be far different than what your brother-in-law, banker or accountant might have told you in the past. From the buyer's perspective, it is important to note that a fundamental valuation principle requires that the business being considered for purchase has the ability to produce a steady income stream sufficient for the buyer to withdraw at least a "fair market" salary for his efforts as well as enough additional cash to purchase the business. Generally speaking, a business must be able to "buy itself" for it to be a good investment vehicle. Consequently, a buyer should be examining key financial ratios, the current equipment mix, cash flow, customer mix and potential reductions in labor and overhead costs as various methods for funding this purchase. From the seller's standpoint, he or she is interested in getting the highest price possible for the business with the least risks possible. Sellers, having owned and operated their businesses for many, many years, often tend to place an unrealistically high value on their business, and this is to be expected but it is also a major problem for many sellers - their unwillingness to be realistic when it comes to valuing their business. Unfortunately, because owners do not have anything other than a "gut" feeling about the worth of their business, the disparity between what a buyer might be willing to offer and what a seller is expecting is often much greater than it should be. That's where we can help. We can help both buyers and sellers narrow the gap between the asking price and the selling price and thus improve the the chances for a successful sale. My valuation services are designed to assist both buyers and sellers, either individually or collectively, in providing them with an independent, 3rd party "fair market" valuation of the business in question. It is important to understand that while there is no "perfect" price for a business, there is a "fair market price." This price may not be the initial asking price nor the initial offering price, but it is a price based upon sound valuation principles, and if the parties in question can agree that the process and principles are indeed fair and logical, then the rest of the acquisition process can proceed quickly. Information Required - My valuation process relies heavily on three year's worth of financial data and uses widely accepted formulas for determining the value of a printing business. I also use a 14-item questionnaire to more accurately determine an excess earnings multiplier or capitalization rate. Below are two PDF documents listing the specific items I need as well as our key valuation questionnaire: DETAILED LIST OF DATA REQUIRED pdf What does the client receive? - The client receives a 8-10 page Excel Spreadsheet that includes totally recast income and expense worksheets, a valuation criteria worksheet, as well as a written narrative report outlining the approach we used and our estimated value of the business. How long does it take - Valuations, once all the material is received, are typically prepared in 7-10 days or less! However, in an emergency, we can produce a valuation report in 72 hours or less in situations where sellers or buyers find themselves in dire situations requiring immediate action. Generally speaking, we do not charge extra for this "rush" service, assuming we can meet our obligations to other clients. How much does it cost - Our standard fee for this service is $975 and applies to most business valuations. Higher fees ($1,100 to $1,500) may apply in situations involving complex partnerships, property settlements, partnership dissolutions, divorces, etc. Call for further information. This fee is due upon engagement. We do accept MasterCard, Visa or AMEX . |
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