When approaching the sale of your company an owner must build an understanding of company value. Not surprisingly the number one reason why a middle market deal falls apart is the difference between what an owner wants for their business, and what they can realistically generate through a sales process. For this reason, it is usually as important to understand what levers will influence an appreciation in value, whether short-term or long-term. This will dictate an owner’s timeline for any sale, and also any tactics they should deploy or investments they make to drive value up.

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There are three main approaches to valuation; i) asset based, 2) income based and 3) comparable based. With the asset based approach we would look at the balance sheet of the company. An income based approach will analyze the economics of the business and model out profitability over future years using discounted cash flow (DCF) analysis. The comparable based approach looks at the sale value of similar companies. This last approach is the simplest and will generally yield a good amount of insight in most situations.

 

The focus of any valuation methodology will tend to favor one of these three approaches, depending on the individual company profile, although elements of all three will be included in a comprehensive valuation exercise.

 

We would be delighted to offer you our perspective on your company’s valuation. This would be a free consultation and would require some time with you on the phone, or in person, plus some modest supporting information. We would also both use this time to explore potential partnership options between our two companies (from experience we find this process to be highly useful to owners whether or not they ultimately engage with Muir on other work).

 

As an owner-manager, you are constantly faced with a multitude of complex decisions. You may be considering options to expand your business, dialing back your role in the company or a complete sale of the business.  As former CEO's, business builders and investors, Muir is uniquely positioned to help with these challenges.