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Business Valuation Service
A Business Valuation (or stock valuation) is an appraisal that
determines the fair market value of a business enterprise or its equity. Fair market
value represents the price at which a willing buyer and a willing
seller, both being informed of the relevant facts about the business,
could reasonably conduct a transaction, neither person being under compulsion to
do so.
What are the approaches to value?
A business valuation should examine these three
approaches to value: the Income approach, the Asset Build-up or
Cost approach, and the Market approach. An explanation of the relevance
of each of these approaches to the business being appraised should
be part of the business valuation.
What are the uses of a business valuation?
A business valuation might be performed in order to comply with
the goodwill impairment testing requirements of SFAS
142, in the establishment of non-compete and buy-sell agreements,
in the securing of financing or additional capital, in merger and
acquisition endeavors, in divestitures, to provide boards of directors with fairness
opinions or solvency opinions, for estate planning and gift tax planning, fresh start
accounting, for dissenting shareholders, for litigation support, and in dissolution
of marriage.
What types of businesses benefit from business
valuation?
Most businesses can benefit from an up-to-date business valuation.
The appraisal may allow the business to satisfy the requirements
of a third party. Some of these third parties might be auditors, assessors,
insurers, attorneys, lenders, the IRS, or others.
How long is a business valuation considered
up-to-date?
Because of dynamic and fluctuating market conditions, which affect
various businesses differently, no exact answer can be given to
this question. Normally, updating a business valuation
requires a total review of the original appraisal in order to re-examine
each of the three approaches to value. The appraiser must also reassess
the economic outlook in general as well as the economic outlook
for the company’s specific industry. The busienss valuation
that was made during difficult economic times would more than likely
be different than an appraisal that was made during prosperous times.
For this reason, an up-to-date appraisal is always the best indicator
of value. As stated in FAS 142, Goodwill of a reporting unit shall
be tested for impairment on an annual basis and between annual tests in certain
circumstances.
In the context of valuation of minority or fractional
ownership interets in FLP and LLC partnerships, does appraising family limited
partnership interests differ from appraising a business?
Yes. Because the stock of many businesses are owned by individuals who form partnerships,
the value of a majority or minority interest in the underlying partnership
assets are affected. Among other variables that affect the partnerships
value are: size of the interest being appraised, restrictions laid
out in the family limited partnership or LLC agreement, the historical
dividend payments paid and expected future dividend paying capacity of the entity, the historical
profitability of the partnership, the future outlook of the enterprise,
the net asset value of the underlying assets, etc.
Cambridge Partners appraises fractional ownership interests and partnership interests for a
variety of purposes, including: estate planning, gifting, divorce, FASB 141, for buy/sell
agreements, joint venture contribution, SFAS 142 and SFAS 144, etc.
What industry segments has your firm served in the area of business valuation?
The professionals at Cambridge Partners have performed
business and/or stock valuations for companies engaged in numerous industries,
including, but not limited to: retail, food & drink, medical, automotive, consumer
services, technology, finance, rubber, transportation, chemical, pharmaceutical, insurance,
finance and banking, professional services, entertainment and many others. The following illustrates valuations
performed by our firm:
- 409(a) valuation of a national branded food products company owned by a private equity group
- Valuation of a specialty steel products business as part of an S-election
- Software company SFAS 142 business valuation for a reporting unit of a Forbes 100 Japanese company
- Invested capital business valuation of a Midwest based medical imaging (MRI) company as part of an acquisition
- Stock valuation of a New York based talent agency which represents well known classical artists, instrumentalists and orchestras
- Business valuations of several of the nation's largest branded food products companies
- Valuation of the common and preferred stock of a specialty chemicals company in Texas
- Common stock valuation of a Northern Europe domiciled metals business as part of a cross border tax strategy
- SFAS 123(r) stock option valuation of an OTC:BB plastics company
- Business valuations of numerous automobile racing facilities across the country,
including: oval tracks, drag strips, road courses, test facilities, asphalt paved tracks and DIRT tracks
- Business valuation for a manufacturer of specialty power generators as part of its planning for potential sale
- Business valuation of a Hyderabad India specialty electronics manufacturer as part of its joint-venture with a U.S. Company
- Business valuation of a hi-growth pharmaceutical company for litigation support
- FASB 142 valuation to test for any goodwill impairment of a leading specialty products retailer
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