Dale Krebbs
Marketing Consultant
Mid-America Manufacturing Technology Center
"Your pushing for the 'No' is the most unique selling concept I have been introduced to in 40 years! It really boggled my mind. I went from 'no way' to that's 'THE WAY'!!"
Pre-Acquisition Due Diligence
How Much is a Company Worth?
Valuing a business is not an exact science. The valuation process often involves comparing several different approaches and selecting either the best method, or a combination of methods, based on the analyst's knowledge and experience. Generally, there are several different methodologies that practitioners use to value businesses. These are:
1. Asset-based valuation;
2. Comparable transactions analysis;
3. Comparable public company method; and
4. Discounted cash flow.
In applying these methodologies to determine the value of a business, one or more of the following factors are generally reviewed and analyzed:
1. The nature of the business and its operating history;
2. The industry and economic outlook;
3. The book value and financial condition of the company;
4. The company's earnings and dividend paying capacity;
5. The value of the company's intangible assets;
6. Market prices of public companies engaged in similar lines of business; and
7. Transaction prices of other companies engaged in similar lines of business.
Item #5, “Intangible Assets”, can be a huge point of contention between buyers and sellers, especially in areas such as SALES.
How much is the company REALLY worth?
The valuation methodologies and factors outlined above are based primarily on historical performance information and assumptions concerning subjective value-adders. Remember, Sales is the LIFE BLOOD of every company. Many factors involving Sales can add (or detract) tremendously to the value of a business:
- What is the True Value of the SALES PIPELINE?
- What is the True Value of the existing Customer Base?
- How good is the organization’s existing Sales Force?
- How good is the Sales Management?
- Are the Salespeople truly capable of carrying out the strategies?
- Can you TRUST the Projections?
The Executive Summary and Management Overview offers a buyer comprehensive data and provide the information necessary to more accurately access the value of a company’s Forecast, Team, Pipeline and associated Sales Assets.
