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A Different Look At Valuing Your Company

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ENLIGN DEAL TEAM | 06/27/2012
Is there pricing elasticity? What's proprietary? What's the company's competitive advantage? Status of employment agreements and non-competes?

Post-Acquisition:
  • Are there cost savings after purchase?
  • Are there significant capital expenditures pending?
  • Is there synergy with the seller?
  • Is it perceived the integration will go smoothly?
  • Are there substantial cross-selling possibilities?
  • Will the cultures blend?

The Financials: By training and education, many business appraisers emphasize the numbers. They will look at the past, current and future numbers. They will consider all the basic financial figures such as:

  • Growth rate
  • Return on investment
  • Gross profit percentage
  • EBITDA percentage
  • Industry metrics
  • Debt to net worth
  • Book value

Fundamentals: Business appraisers should also consider the company’s history, its management, products, distribution, etc. The following should also be seriously considered: multi-products, different markets, wide distribution and the quality of management.

Value Drivers: These are important business elements that are most often ignored or completely overlooked by business appraisers. However, they are very important to a potential buyer. • product differentiation • defensible position • technology • dominant market share • well-known brand(s) • cost advantage • proprietary customer