Enlign

Checklist For Valuation

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Start with the business - Value Drivers: Size, growth rate, management, niche, history - Value Detractors: Customer concentration Poor financials Outdated M&E Few assets Lack of agreements with employees, customers, suppliers Poor exit possibilities Small market Potential technology changes Product or service very price sensitive.
Financial analysis: Market Value - comparables Multiple of Earnings - based on rate of return desired
Structure and terms: 100% cash at closing could reduce price 20%
Second opinion: Even professionals need a sounding board
Indications of high value:- High sustainable cash flow - Expected industry growth - Good market share - Competitive advantage - location/exclusive product line - Undervalued assets - land/equipment - Healthy working capital - Low failure rate in industry - Modern well-kept plant
Indications of low value: - Poor outlook for industry - foreign competition price cutting regulations taxes material costs - Distressed circumstances - History of problems - employees, customers, suppliers, litigation - Heavy debt load