PRIVATE COMPANY BUSINESS VALUATIONS
Are you thinking about selling your closely-held business but don’t know how much it’s worth?
Or maybe you’re embroiled in divorce proceedings and need to place a value on your business?
If either of these scenarios applies to you, you’re a candidate for a business valuation.
Business valuations for non-publicly traded companies are impacted by a multitude of factors, which do not impact publicly traded companies. Unlike companies who are listed on the public stock exchange, small business owners often find it difficult to prove the real value of their businesses. This is largely due to the fact that private company data is not readily available for benchmarking. And public company data is often not relevant. Because of these issues, we do very little benchmarking to compare your business with others in the marketplace. While benchmarking may be a useful tool in the valuation industry it does not always present a clear and accurate account of private company net worth.
At LATP, we measure the fair market value of a business based on its track record of earnings, growth and rates of return. We employ methods which focus on both Income and Asset approaches when applicable. Our primary measurement tools include:
- Discounted Cash Flows
- Internal Retention Rates
- Sustainable Growth Rates
- Capital Asset Pricing
- Capitalization of Earnings
Business Price Justification
Price equals fair market value. So we appraise businesses based on what a willing buyer would pay under reasonable terms. Our objective is to calculate the cash flow required from the business to reasonably support an acquisition.
Our price justification is based on the assumption of an arms-length transaction and does not account for synergistic benefits that may be realized by a specific business buyer.
Our price justification also assumes the typical asset sale scenario common to most small business purchases. Under this scenario, the buyer may or may not acquire underlying business assets without the assumption of its liabilities. And what follows are cash flow estimates which meet the needs of a reasonable buyer.
We do not provide real estate valuations.