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Business Valuation

An Intermediary’s Opinion of Value (IOV) performed by Business Transition Strategies is a comprehensive report targeting the market value range of your business. We recommend that an IOV be performed every one to three years, depending on how soon the business will be prepared for market. The initial projected value is the single most important determining factor for an orderly and timely transition.

The IOV measures businesses against completed transactions in the specific industry in which you operate. The four most important metrics that are considered are: Gross Sales, Gross Profit, Earnings before Interest, Taxes, Depreciation, Amortization (EBITDA) and Discretionary Earnings. The importance and weight given to each metric varies depending on the industry, and can also vary depending on the type of acquirer. Various other methods such as comparisons to public companies, discounted cash flow and asset-based valuations will sometimes be used as a verification or double check.

There is a lot of information in the public domain that can mislead about true market potential. It is not uncommon for exceptional, one-of-a-kind value ranges to be repeated as though these results will play out in all situations. The IOV uses a consistent process, based on data sources, to provide a clear and realistic value range.

The IOV can also help an owner highlight potential areas of improvement, based on comparisons with other industry peers or with similar industries. After an in-depth review of the financials the Intermediary may also suggest areas where the financial presentation can be adjusted to clarify and define expenses. The process helps make the true financial performance easier to understand for an acquirer, as well as facilitate the due diligence process, so is generally part of our transaction process as well.

 


 

BTS News

  • M&A Advisor Tip: Intangibles Matter

    M&A Advisor Tip: Intangibles Matter

    Intangible assets can play a significant role in your business value. While these may not take physical form, they can be legally identified and transferred. It can be a hard exercise, especially w

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  • Selling Your Business? Get Clear About Why

    Selling Your Business? Get Clear About Why

    We regularly have conversations with owners about selling. As part of these discussions we take time to talk about the ‘why’. This almost always leads to one of ten core factors, each of which req

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  • Successful Acquisition Hinges on More Than Strategy

    Successful Acquisition Hinges on More Than Strategy

    In the current labor environment, it can be difficult to grow a business. Instead of hiring the talent you need to fuel organic growth, growth through acquisition can be another way to expand.

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  • Three Things to Check

    Three Things to Check

    When you are preparing for a possible transition and sale, lots of things come to mind. Before you get too far along the path to dreams, consider these three things when preparing for the transaction.

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  • What’s the M&A Outlook?

    What’s the M&A Outlook?

    The intense pace of mergers and acquisitions that shaped the Lower Middle Market last year is likely to continue through 2019, according to the most recent Market Pulse survey. The survey is a join

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  • Why an IOI can help get a better LOI

    Why an IOI can help get a better LOI

    We generally include an Indication of Interest (IOI) in our sales process. This is not the same as an LOI – letter of intent - but is still an important part of the sales process. Here’s why.

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  • Looking Back to Plan the Future

    Looking Back to Plan the Future

    As one year closes; another is just beginning. It is an excellent time for company owners to consider the options for what is next.

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  • Growth Through Acquisition in the Lower Mid-market

    Growth Through Acquisition in the Lower Mid-market

    Growth through acquisition has been a strategy largely used by mid-sized and larger companies for years. Now firms in the lower mid-market are getting into it as well.

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  • PEI Cites 8 Attributes of Quality Deals

    PEI Cites 8 Attributes of Quality Deals

    Quality deal flow is among the top concerns for M&A advisors. A recent blog posted by Private Equity Information offers 8 key attributes of “quality deals.”

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  • In an M&A Program: Why Consider a Business “Carve Out”?

    In an M&A Program: Why Consider a Business “Carve Out”?

    An M&A program need not be limited in the search to the complete acquisition of a company.

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Case Studies

  • Precision Machining Company

    Initially, liquidation was a serious consideration. It would offer a quick exit but would hurt loyal employees and disrupt the customers who had come to rely on its quality production.

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  • Green Product Company

    Our client owners could dig in for the long haul…However, this would take five years or more. Owners simply lacked the horsepower to do it.

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  • Water Purification Company and Young Buyers

    Owners decided they wanted to retire. They also wanted to be fair to the staff who had been loyal to them. Could the company be sold, the staff retained and the facility remain in use?

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  • Magnetics Company with High Profile Customers

    (T)he manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings.

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