Valuation for Business Purchase or Sale
Planning A Purchase - Due Diligence Requirements
Scope Of Investigation
Business For Sale$$$ ??
Summary Of Where We Can Help You Run You Business More Effectively
Planning A Purchase - Due Diligence Requirements
If a business merger is going to have a reasonable chance for success, it requires proper planning & thorough investigation of the acquisition target. This includes everything from verifying the actualities of operations to finding weak spots for moving the price.
The due diligence process begins at the moment the buyer looks at possible purchase.
Operational Assessment
Develop an understanding of the reason earnings occur and the potential for its continuation. Determination in what
fashion the earnings stream (percentage) will rise. This involves fact gathering analysis, interviews with management & fact gathering on suppliers and customers from management and outside sources. We then review the underlying assumptions used in the projections for material reasonableness.
Legal Assessment
We review all pertinent documents that create legal obligations for the target company. We then, with counsel make assessment on the validity & exposure to existing & future claims.
Financial, Economic and Accounting Assessment
We determine trends and assess the impact of inflation on target company. Next we arrive at range of investment value and terms under which target is available (from the search and screen process). The objective here is to see if purchase makes sense? After agreements between buyer and seller to maintain secrecy of the business transaction, then the work begins:
Scope Of Investigation
The purchase investigation examines & tests all business assumptions and underlying market conditions to discover if the goals and objectives of the acquisition are viable. Principal areas of review should include:
Environmental Assessment
Determining any problems currently existing, detection of those that may arise in the future.
Financial & Acct. Assessment
Determine trends and assess the impact of inflation & cyclicality on operations and calculate the working capital & future capital requirements. Determine the reasonableness of future cash flow projections.
Conclusion
A purchase investigation should be able to provide the buyer with a thorough understanding of the seller's business. In particular it should focus on aspects that are not readily known, yet are critical to the ultimate decision. Accordingly, the due diligence should be designed to obtain & verify the predetermined operating assumptions necessary to assess the target company.
Business For Sale$??
When selling a business you need to know what can be done to increase the company's value in the market place. The best way to accomplish this is to address weaknesses/threats and capitalize on strengths/opportunities before entering negotiations. Preparing the business for sale is not an overnight process. It can take months if not years of planning to maximize the business's value & determine how to treat problem areas in discussions with potential buyers.
Factors Affecting Value
The phrase "timing is everything" is especially true when selling a business.
In evaluating the Company's present position, outlook and capabilities, consider the following issues:
 | Are the company and its products reaching maturity? |
| Can the company show a history of stable growth and profitability?
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| Is the industry reaching a mature stage or experiencing rapidly changing technology?
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| Are the products losing their uniqueness or is the company unable to make the commitment necessary to invest in product development?
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| Is an adequate supply of raw materials and labor available? |
| Is competition likely to increase? |
| Is the company at or near capacity, so that future growth requires significant capital expenditures?
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| Does the company have a well defined strategy for future growth
and profitability? |
