Alteris LLC offers a unique approach to business valuation – the Four Steps of Valuation. Each step is increasingly more detailed and comprehensive. You can pick the level of valuation that fits your needs.
Step One – The Express Valuation
The Express Valuation uses very basic industry formula, market and other sector metrics and is ideal for preliminary business planning and general information. If you have never valued your company or want a very general “ball park” estimate, the Express Valuation is for you. The Express Valuation is only for use in conjunction with other consulting services and should not be used for any purpose other than general information.
Step Two – The Market Compass
Our Market Compass Report is a more in-depth study of your company based on market transactions of comparable transactions in your industry. It is an excellent weather-gauge for smaller companies seeking equity financing or companies trying to determine if the time is right to sell. It can also be used as an Indication of Value for other purposes.
Step Three – The Valuation Review
The Valuation Review adds to the Market Compass by including more economic, industry and company information in addition to enhanced valuation calculations. It can provide the basis for developing a comprehensive capitalization strategy; determine value for potential M&A targets and other purposes. Though The Valuation Review is listed as Step Three, depending on circumstances and your needs, it can be more thorough and exacting than Step Four, below.
Step Four – The Valuation Analysis
The Valuation Analysis is the gold-standard service used to value your company for purposes of tax and litigation valuation. We perform an in-depth valuation analysis of your entire company or a portion of its assets value. The Valuation Analysis is recommended when negotiating a sale, performing due diligence on an acquisition, when preparing a PPM, for litigation support, estate and other tax related needs.
Here is More detail on Step One – The Express Valuation
The Express Valuation was developed to meet the demand of clients who want a quick and inexpensive estimate as to their business value in conjunction with other consulting services. The Express Valuation provides a very basic, general and perhaps inaccurate gauge or “sanity check” to help understand the possible value of your business and determine if strategic change is possible or required. It is to be used with other consulting services and should not be considered as a stand-alone product.
The Express Valuation is based on Industry Formulas (commonly called “Rules-of-Thumb”) and perhaps a limited search of our valuation transactional databases. It does not contain more sophisticated research or calculations of value. It does not take into consideration factors that are specific to your company or situation.
Industry Formulas are derived from trade groups, business brokers and published industry sources. This is market information based on broad guidelines only – the specific situation of your business may result in a different valuation outcome should one of our more complete valuation steps be utilized. Industry formulas are often considered to be a inaccurate and crude method of business valuation. You will often see industry formula used by so-called lower integrity business brokers.
You will receive a letter report that describes a range of possible values for your firm. The report may contain some additional discussion on current trends in valuation, the transaction market and other related items.
The information needed for an Express Valuation includes a description of your company’s business, the SIC/NAICS code (we can help you find this) and financial data for three years but at least the most recent year.
The Express Valuation is not appropriate for those who want a more definite Indication of Value or Conclusion of Value. It is for general information and planning purposes only and is to be used in conjunction with other consulting services. It should not be used for any situation where a more thorough valuation analysis is needed. In those situations, we recommend one of the more complete Steps of Valuation.
Here is more detail on Step Two – The Market Compass Valuation
The Market Compass gives the small business owner a high quality valuation for planning purposes at a low cost. This valuation is based on a study of market transactions of comparable companies in your industry.
This method is often called the comparative transaction method. It is also sometimes called the “market approach” because the transactions used as the valuation basis come from the “market”. That market is where willing buyers and sellers, each looking out for their own self-interest, exchange property at a negotiated price.
Our Market Compass small business valuation features:
· A range of value using results from different market valuation techniques.
· A report that includes a brief analysis of the economy and your company’s industry.
· A financial analysis that compares your company to industry averages.
· Value Direction chart presents the pricing trends of businesses in your industry
· Comparative performance analysis against industry standards on key ratios.
For an added fee, we can present more detailed information on the specific companies that compromise the valuation market multiples used in the analysis.
To begin a Market Compass Valuation we will request some information about your company, including financial statements. We may request a short telephone interview so we can better understand your company’s business.
You get all of the above for much less what a Valuation Review or Certified Valuation would cost.
Here is more detail on Step Three – The Valuation Review
The Valuation Review is a custom-designed analysis to meet your specific valuation needs. It adds more comprehensive background, analysis and valuation calculations than what is used in our Market Compass report.
The Valuation Review is a valuation alternative for companies that are somewhat larger or more complex and in-sightful analysis than those addressed by the Market Compass report.
While the exact information needed to perform a Valuation Review will vary, we anticipate the documents, financial and other data needs will be greater than for the Market Compass. In addition, on-site interviews may need to be conducted.
The type of output will depend on the client. You may receive a written report, a presentation or an in-person consultation with a valuation expert. It all depends on your needs.
In particular, this level of report is often used for Mergers & Acquisitions valuation and analysis. M&A reports often require very specialized analysis focused around the specific needs of the client and the unique circumstances of the situation being analyzed.
Typically the calculations of value developed within a Valuation Review will be based on income methods supported by market data. Again, the exact valuation technique will be dictated by the circumstances.
We will specify the exact information we need and the output before the engagement. You will know precisely what is needed and what will be provided to you before any work begins.
The price range for a Valuation Review depends on your needs. This is a custom report and the exact work required will vary depending on the circumstances. Additional fees may be necessary to support the valuation report to 3rd parties, with the exact amount again depending on circumstances. Though this is listed as number three, the report may be more comprehensive and the support we provide to the client may be far in excess of any of the other types of valuations we perform.
Here is more detail on Step Four – The Valuation Analysis
The Valuation Analysis will result in a Conclusion of Value as defined by the National Association of Certified Valuation Analysts. It is conducted according to procedures as defined by IRS RR 59-60. This rule generally describes how to conduct a valuation for tax purposes and is very thorough. It is the standard in the profession for complete and thorough valuations for tax and litigation support purposes.
If you are filing a tax return that requires a business valuation for gift, estate or other purposes, it will need to follow the requirements of IRS Ruling 59-60. It is also highly advisable to get a 59-60 valuation for litigation. Though some judges at the lower court level (e.g. trial court) will accept reports that do not meet 59-60 standards, this level of valuation is most likely to withstand a challenge to the Conclusion of Value.
Our 59-60 level valuations can be utilized for many purposes, among other things including:
• Estate and Gift Tax Returns
• Stock Option Plans
• Charitable Contributions of Stock
• Fairness Opinions
• Litigation Support
• Buy/Sell Agreements
• Other – the 59-60 methodology is a complete and thorough business valuation.
The Valuation Analysis report is comprehensive. It includes an examination of the economic and industry trends that affect your company, in-depth financial analysis and comparisons, detailed valuation calculations and other items. All following Internal Revenue Code (IRC) 59-60 standards.
The price is based on the complexity of the business entity involved and the particular requirements of the valuation. Additional fees may be necessary to support the valuation report depending on circumstances.
Some of the work performed for a Market Compass or Valuation Review may be usable in a Step Four Valuation Analysis. If you have an earlier valuation with us, you will likely get the lowest possible price on a high quality Valuation Analysis.
