Case
Study
Are you walking into a deal blindfolded?
True story – In 1998, we valued a manufacturing business in the Midwest
for $30 million. At first, the seller was convinced we were crazy. He and his
CPA thought the business was only worth $17-$18 million. Fortunately for the
seller, his financial advisor insisted that the business be valued. And it
ended up selling for $30 million –over 66% more than they had anticipated.
If you’re selling a business, initiating gift & estate tax planning,
involved in divorce proceedings or financing a business, make sure you talk
to us first. You might find an extra few bucks in your pocket, too!
How do you measure value? – Is There an Easy Rule of Thumb? Even though these
two companies have similar characteristics, would you value them
the same? |
||
Revenue History |
Company - A |
Company - B |
2005 |
$12,000,000 |
$12,000,000 |
2004
|
$8,000,000
|
$15,000,000
|
2003
|
$6,000,000
|
$18,000,000 |
Total Debt: |
$1,500,000 |
$7,000,000 |
Avg. Equipment Age: |
3
years |
20 years |
Owner's Vacation |
6-8 weeks |
None-the business can't work without owner! |
Similar Industry: Similar Customer Base, Same Amount of
Revenues |
||
Company - A |
Company - B |
|
Revenue: |
$12,000,000 |
$12,000,000 |
EBITDA: |
$1,000,000 |
$500,000 |
Applying a simple “Price/Revenue Multiple” rule-of-thumb would have been disastrous in this case. Experience Count$ - call on NBVS for your valuation needs!
