Tag Archive for Business Valuations

Business Valuation, Growing Value And Liquidity Realization (Part XXIII Of eBook Series)

Business Valuation, Growing Value And Liquidity Realization (Part XXIII Of eBook Series)

(This is a continuation of a series on Business Valuations)

Phase VIII – Due Diligence DVD – presents a digital versatile disc or memory stick that contains certain underlying information, setting forth the disclosures made by the company. A Trusted Business Advisor shall vet the contents to make it appropriate for a Transaction, but not engage in the verification of any information provided by the Client. This facilitates a prospective investor’s decision-making process and minimizes costs, as the credible backup validates the investment opportunity.

Phase IX – Business Continuity Plan (BCP)

Business Continuity has two goals: (1) business as usual during strategic planning or a capital markets transaction, and (2) disaster recovery planning. Both include creating a working BCP; including Step-By-Step Business Impact Analysis, Risk Assessment, and more.

• Assures that significant disruptive incidents can interrupt its normal business operations. If the company has a high level of dependency upon its automated systems and processes and this creates risks that need to be mitigated.
• Recognizes that the company the needs to recover from disruptive incidents are made as quickly as possible and that this necessity to ensure a speedy restoration of services requires a significant level of advance planning and preparation.
• Assists the company in managing a serious disruptive crisis in a controlled and structured manner. The BCP contains information on emergency contact details, strategies to mitigate impact, procedures to be implemented and communication processes to be followed in response to a serious disruptive event. Major points addressed in the BCP are detailed below.

• Plans for a major disruption where equipment and communication infrastructure are available to continue the business of the company.
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Business Valuation, Growing Value And Liquidity Realization (Part XXII Of eBook Series)

Business Valuation, Growing Value And Liquidity Realization (Part XXII Of eBook Series)

Phase VI – Capital Markets Alternatives

Deal Ratings. All deals receive a score, which is aligned to how a financier assesses acceptable minimum scores to finance a deal. A properly prepared CMA scores all sources of capital pools under the same system to remove any subjectivity.

What a Score will look like:

Deal Ratings
Deal Ratings

If you have a B Grade Deal and are unwilling to take the necessary steps to upgrade to a higher score, then you should lower your expectations about completing a transaction, because there are fewer capital sources willing to accept B Grade Deals. Typically, if a B Grade Deal is accepted, the costs are much higher than an A Grade Deal. If your rating is below a B- Grade Deal and you’re not willing to do what is necessary to move up to at least a B- Grade, then it is highly unlikely you will complete your transaction.

Business Valuation Category
Business Valuation Category

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Business Valuation, Growing Value And Liquidity Realization (Part XIX Of Book Series)

MICHAEL GILBURD

Transfer Pricing – the practice of charging prices for the supply of goods or services to a related entity (usually wholly owned) in such a way as to repatriate profits or affect tax or duty bills in your favor.

Generally, international transfer pricing and tax planning experience has been obtained from working for major financial institutions while assigned to large multinational corporations.

You can rely on a credible transfer pricing study for the following:

• The U.S. transfer pricing regulations, under IRS §482 of the Internal Revenue Code, require that inter-company transactions be priced under the same terms that would have existed had the transactions taken place between unrelated entities. Similar regulations now exist in virtually every developed nation around the world.

• Any business entity operating in more than one country likely has inter-company transactions involving the exchange of tangible property, intangible property or services.

The Importance of Transfer Pricing
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Business Valuation, Growing Value And Liquidity Realization (Part X Of eBook Series)

Business Valuation, Growing Value And Liquidity Realization (Part IX Of Book Series)

ESOP Valuations and Fairness Opinions are used to initially independently determine if an ESOP is feasible for a company, and subsequently to establish the worth of a company for ESOP purposes.

ESOP:
 Qualified Plan governed by ERISA.
 Required to be invested primarily in the sponsoring employer securities.
 May be used as a corporate finance technique.
 Often used as an exit strategy for a retiring shareholder. The ability for the ESOP to incur debt and the ability for the selling shareholder to reinvest the proceeds on a tax deferred
basis is very attractive.
 Creates a market for the stock of a closely held company and make the purchase of that stock a pretax (deductible) expense.
 IRC §1042
• Rollover – Allows the seller of stock to reinvest the proceeds from the sale in qualified replacement securities (conditioned on a sale of at least 30% of the company’s outstanding
stock and that the reinvestment occur in the next 12 to 15 months).
• A bank or other lender funds the transaction in order to take advantage of IRC §1042.
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Business Valuation, Growing Value And Liquidity Realization (Part IX Of Book Series)

Michael Gilburd - Business Valuations

What Will the Results Show?

Companies and brands are evaluated by their customers and prospects across a range of factors. Your first job is to determine what factors are relevant to each individual situation. This is done any number of ways:

• By conducting a number of interviews with company staff to get their take on what is felt to be relevant
• Exploring previous research, the company may have conducted to determine customer attitudes or satisfaction
• Conducting a small number of telephone interviews with selected clients (both past and present) to surface their attitudes toward the company
• Conducting one or two focus groups to surface attitudes as well as brainstorm factors that would be important to customers in keeping them loyal

Once the relevant factors are agreed upon, data is collected among the appropriate target.
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