Dr. Rajeev Jain - Business Valuation

A valuation specialist typically considers the following factors in performing a valuation:

• Milestones achieved by the enterprise
• State of the industry and the economy
• Experience and competence of management team and board of directors
• Marketplace and major competitors
• Barriers to entry
• Existence of proprietary technology, product, or service
• Work force and the work force's skills
• Customer and vendor characteristics
• Strategic relationships with major suppliers or customers
• Major investors in the enterprise
• Enterprise cost structure and financial condition
• Attractiveness of industry segment

Our Business Valuation Methods

We offer market valuations to Clients who are interested in learning the fair market value of their business. While there are a number of methodologies and techniques used within the business valuation industry, they can typically be categorized into three core approaches: Asset based, Income based, Market Comparison based. When we conduct business valuations, a blended model is used based upon the appraiser's judgment, assets in question, past and future cash flow capacities, as well as the depth and breadth of available financial, operational, and industry relevant data. All applicable methods used are then presented within the valuation package.

Asset Based approaches

The asset, or cost, approach considers the value of a business to be equivalent to the sum of its parts; or the replacement costs for this business. This is an objective view of a business. It can be effective in quantifying the fair market value of an entity's tangible assets, as it adjusts for the replacement costs of existing, potentially deteriorating, assets.

Income Based approaches

The income approach identifies the fair market value of a business by measuring the current value of projected future cash flows generated by the business in question. It is derived by multiplying cash flow of the company times an appropriate discount rate. In contrast the asset based approaches, which are very objective; the income based approaches require the valuator to make subjective decisions about discount rates or capitalization. Many considerations and variables are measured to account for the specific contribution of primary value drivers in a business that result in influencing cash flow: revenue drivers, expense drivers, capital investment, etc. This method, which comes in several approaches, is useful as it identifies fundamental factors driving the value of a business.

Market Comparison Based approaches

The Market Comparison approach to a business valuation is based upon current conditions amongst active business buyers, recent buy-sell transactions, and other fairly comparable business entities. Financial attributes of these comparable companies and the prices at which they have transferred can server as strong indicators of fair market value of the subject company.

When a client engages our expertise to conduct a fair market business valuation, we view that business through 9-10 various approaches (all of which fall under the three primary methods) and then determine which of those are most applicable to that business and its type of operation, industry, history and future prospects.