Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

June 4, 2013

Current Value of Your Business and Value Drivers

By Joseph Eneldas

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There are many reasons business owners need a business valuation.  Estate planning, partnership splits, refinancing, recapitalization or divorce are just a handful of scenarios where business valuations are needed.  Another tremendous and underutilized use of business valuations is a current snapshot of a business value in the buy/sell market place.  The information is often priceless in improving profitability, salability and value.  Even the slightest improvement can have an enormous impact on the true market value of a business.

“A certified business valuation by a third party is the only way to accurately determine true market value”, says Michael Feite, Managing Director, Eastern Pennsylvania. “ Business valuations are a crucial part of a business transfer transaction.  Not only do they help set an asking price for a business seller, they also justify a sales price to a buyer, and the buyer’s respective bank financing the acquisition.  Without a business valuation up-front, a buyer will not take the seller serious and certainly will not make a fair offer.”

“An increasing trend is for savvy business owners to obtain a certified business valuation to analyze their current standing,” says Steve Wrubleski, Managing Director, South Jersey, “they then use this to make business improvements to increase the value of their business.”

So now that we have addressed the benefits of a certified business valuation, let’s look at what drives value.  Value drivers are key elements that build or protect value of a business.  These value drivers are crucial in determining current and future value as well as salability of a business.  Buyers thoroughly analyze these value drivers that impact their risk, comfort and confidence. For example, a high dependency on a single customer, reliance on key employees, non-predictable revenue streams are all factors that impact a value driver.

Due to improper preparation, only a small percentage of businesses can and will sell.  Savvy business owners get a business valuation well ahead of the planned exit time in order to make early adjustments and to improve their business.  This gives them an objective look at their business and value drivers early on in their planning process. A typical list of value drivers includes

  • Historic Growth
  • Profit and Margins
  • Customer Diversity.
  • Employee Diversity
  • Industry Environment
  • Product & Service Mix
  • Macro Economic Market Trends
  • Financial Condition
  • Five to Ten Year Projections
  • Outside Risk Exposure

For a thorough discussion and to learn more about business valuations and value drivers, please contact any one of the firm’s managing directors.

 


About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional merger & acquisition and business brokerage firm with 30 years of experience in New Jersey, New York, Pennsylvania, Delaware and Maryland that assists business owners and buyers with the business transfer process in a completely confidential manner. The company is affiliated with BBN, with 450 offices and access to a national network of qualified buyers and sellers. For more information, please contact A Neumann & Associates at 732-872-6777.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

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Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

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James Belanger, Business Owner

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Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer

“Purchasing a business through this firm was a pleasure. Gary was very professional and transparent throughout the entire process. I look forward to working with A Neumann & Associates in the future.”

William Klemens, Buyer

“I utilized A. Neumann & Associates to assist in an M&A process. They are VERY thorough in using their time-tested process to calculate the value of investment opportunities, a process which provided a very detailed explanation for the value of the potential opportunity. Additionally, they also went above and beyond to extend other services including connecting with others who specialize in your industry and can assist with necessary steps including legal and accounting. Highly recommended!”

Edward Lane , Business Owner

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Achim, who explained the process in detail. He had his colleague Gary come to my office in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using when the time comes for me to sell my business for max value. They gave me great insight into the steps I need to take now to get the best deal in the future. I highly recommend this firm to anybody who wants to sell now or down the road. They not only know their stuff, their actually just real nice guys.”

Robert Kardane, Business Owner
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Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

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