American Corporate Services can help you identify the key factors that will affect the valuation of your business. Our principals have extensive experience in business valuations and associated legal matters.
Value is determined by a buyer and seller agreeing to a mutually satisfactory price with neither party under any compulsion to deal.
Investment bankers rely on 4 primary methods to evaluate a business.
Comparable public company valuations
Comparable M&A transaction valuation
Detailed financial analysis of the assets and liabilities of the business
Discounted cash-flow analysis of expected future results.
The valuation of a business is determined by its earning capacity. Earning capacity is the money available to the owners or shareholders after paying all of the business's operating expenses and taxes. We look at historical results, current performance, and future earnings potential. The risk inherent in operating the business must be evaluated against the uncertainty of future events.
If you are looking to retire, your business may have a premium value to a strategic buyer. Personal considerations that matter to you can affect value if you're looking to sell.
ACS can establish a value for an independent business in 30–60 days. A certified valuation report will cost $25,000, uncertified reports or opinions can cost less.
Premium value to a strategic buyer
A company may command a premium value to a strategic buyer for reasons unrelated to the value of the business as an independent entity. A seller can obtain a premium value for a business by selling to a strategic buyer with specific needs.
1. Unique Intellectual Property: You may have proprietary IP that can be exploited for profit by a new owner. A single patent can be worth more to a large multinational corporation than to a small business.
2. Competition: Eliminating a competitive threat to give a company better pricing control.
3. Geographic Expansion: Establishing a new geographic territory for a buyer's existing products by exploiting the sales and distribution channels of the seller.
Large multinational companies may not be interested in operating your business in its current location. This type of deal is called a "close and move." If you have built a world-class company in a relative remote location, think about the implications for your local community before you sell.
As experienced negotiators, we have obtained legally binding promises from strategic buyers to keep business where they are. We can help find the best solution for you and your community.
American Corporate Services draws upon global insight and broad vision to help clients maximize value when they sell a business. The best buyer is not always the most obvious. We can help you plan for and navigate through rough currents that can cause a deal to capsize.