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Valuation What is the Business Worth? A business is ultimately worth what a qualified buyer is willing to pay. Buyers are mainly concerned with obtaining a fair return on their investment (ROI), while also applying judgments about market position, proprietary know-how and intellectual property, competitive strengths, quality of the assets and earnings, growth potential and risks associated with the business. To determine the potential worth of the business, the company’s financial statements, prepared primarily for tax purposes, must be restated to reflect the true financial performance of the business. An estimated valuation of the business may then be generated based on past and projected earnings. We help our clients determine the true value of the business and, importantly, can assist prospective buyers better understand the rationale for the valuation. C&H provides in-depth, comprehensive business valuations and, importantly, can assist prospective buyers to better understand the basis for a company’s value. Simply plug in three values and the calculator provides an immediate rule-of-thumb estimate. Your confidential data will not be saved on our system. C&H Approach to Valuations Realizing Business Value is the primary objective of each successful ownership transition. Our philosophy is that effective business sales should be fair and beneficial to both buyer and seller. We work with our clients to ensure each transaction represents a reasonable return to the seller while providing sufficient investment value to the buyer. Understanding our client’s business enables C&H to implement a strategic search for candidates who are most likely to recognize the full potential of the business. Each buyer search extends beyond the local geographic area to encompass a targeted range of prospective buyers, including private equity groups, competitors, partner businesses, industry consolidators, and individuals. By identifying strategic and synergistic buyers, C&H is able to increase the likelihood that negotiations will move beyond the technical definition of Fair Market Value, which is simply the most likely price that the business “would change hands.” By articulating the growth potential of the business, C&H facilitates a purchase price discussion that reflects the unique market position of our client’s business and its potential to prospective buyers. The valuation process begins with the collection, review, and analysis of client financial information. The comprehensive process then proceeds to an evaluation of the business, its market, and its growth potential. Earnings are adjusted to reflect the full potential of the business to produce income to new owners under historical operations. The balance sheet and its assets and liabilities are scrutinized and adjusted accordingly. The valuation process then proceeds to identifying the valuation approaches and related valuation methods that will be applied to the specific client business. The C&H Group utilizes a combination of valuation approaches depending on the business and its unique value drivers in order to determine what the business is worth. Within each valuation approach, various methods are utilized to determine a range of value following a defined procedure. These methods often utilize components of more than one approach and an analysis of one or more levels of earnings in arriving at an indication of value: Range of Valuation Approaches
To inquire about the valuation services provided by C&H and their role in focusing strategic plan development or shaping a sales strategy, please contact us at: info@thechgroup.biz |
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