Valuation Services

Valuation Services: Ready to find out what your business is worth?

After 20 years and over $2 billion in successful M&A transactions, our team knows that an accurate business valuation is the crucial first step for a smooth M&A transaction.

What is a fair market valuation?
When it comes time to sell your business, knowing its worth – or valuation – is imperative. Simply put, a fair-market valuation is how much another party would be willing to pay for your business or assets in today’s market. There are several methods to determine your company’s valuation – and different types of valuations you can perform, depending on your goal.

Types of Valuations

Discounted Cash Flow (DCF) Assessments/Debt Portfolios (Consumer and Commercial)
Mainly pertaining to debt buyers and owners of purchased debt portfolios, this valuation approach estimates remaining cash collections the business anticipates receiving from its purchased portfolios over a defined period of time, then discounts these future cash flows back to a net present value.

Street Pricing Analysis/Debt Portfolios (Consumer and Commercial)
This approach breaks purchased portfolios down into different segments based on asset class, stage of delinquency, stage of collection, opportunity to pursue legal action, etc. Different types and stages of accounts can produce different valuations in today’s market.

Market Comps
This approach involves using data from public and private transactions involving companies similar to the client. These market comps can serve as a guideline for how the market would respond to the client’s business.

Income Power Approach
This approach involves analyzing the Company’s historical, current, and future forecasted P&L performance to identify an appropriate adjusted earnings amount for the current twelve-month period. We at CAS call this amount adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and the adjustments reflect expenses during the twelve-month period that would not be expected to exist post-transaction. There may also be negative adjustments if certain expenses would be expected to increase, or replacement expenses would occur.

ESOP Valuations
An ESOP or Employee Stock Ownership Plan, is where a pre-determined amount of a company’s stock is held to an employee trust. An independent appraiser is hired annually to determine the company’s fair market value, and the ESOP trustee will use that information to negotiate the final price with the business/plan sponsor. When an employee retires or leaves the company, their vested shares are repurchased by the sponsor/business at the most recent valuation price.

M&A Valuation Impaction Considerations

Regardless of the valuation method used to determine your company’s worth, there are several considerations that can positively or negatively affect your valuation.

  • Culture – if you are keeping one or multiple management team members in place, will they mesh well with your current organization?
  • Client Base – what type of clients are you going to be acquiring, what type of contracts do they have, and how often do they RFP? What percentage does their top client account for?
  • Geographic Location – are the employees located in a higher-wage state? Are they in a state with accessible employees?
  • Technology – does the company have any technology that could augment your processes? How difficult would it be to implement your technology?
  • Synergies – what level of cost efficiencies are there between your business and the target business?

How We Perform Valuations

We apply our extensive market knowledge to perform an assessment of value that is both realistic and respected. While other valuation firms concentrate primarily (or solely) on financial performance and need to research the industry to come up to speed on comparables, we utilize our unparalleled market knowledge and proprietary information to develop all of our opinions.

By utilizing the most comprehensive proprietary database of done deal and debt portfolio pricing information, and the most extensive valuation resources available, you can be assured of a well-substantiated, accurate opinion of value.

In addition, we closely analyze the operating performance of the business, specifically undertaking a detailed review of profitability. In the case of a debt buyer, we analyze their purchase and liquidation strategy, as compared to its peers.

Our valuation analysis is thorough and incorporates the qualitative and quantitative factors into the determination of an appropriate valuation methodology. We detail those analyses, providing a descriptive “roadmap” for our valuation determination.

Ready to set up a meeting?

comparison charts on a computer

Arm Debt Purchasing Case Study

CAS Competitive Advantage

We prioritize honesty, open communication, and collaboration with clients. Interested in learning more about our approach?

Check Out Our Recent Podcasts