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Business Valuations Delaware


Knowing the value of your business is important whether you are trying to sell it, obtain a loan, or get investors. A Neumann & Associates, LLC offers mergers & acquisition advisory, business brokerage, and professional financial services. We offer our services to large and small businesses alike.

What is business valuation?

A business valuation simply determines the overall worth of your company. It is a comprehensive look into the amount of earning potential your business has and the amount of money and resources you put into it. All tools used must be objective to pass the stringent requirements of the SEC.

Steps to Business Valuation

When you use A Neumann and Associates business valuation services in Delaware, we will meet with you and collect information about your marketing and operational cost. We will also need to have a copy of the company’s tax returns for the past three years. We must also have a list of the company’s assets and liabilities.

One of the most important things we will talk about is the reason for the valuation. The valuation will be different if you are selling a business for profit than if you are forced to liquidate some of your assets. Also, valuations for selling a business as opposed for estate planning are different.
When we have your business information, we will use tools provided by different business valuation companies to determine a value amount for your company. Further, the federal government strictly regulates some industries, and those regulations may affect the value of your business.

Reviewing the Performance History of the Business

It is important to establish how the company being evaluated has performed relative to other businesses of its kind. We will look at the business entity type and will want to know the ownership history. The size of the business and the number of years that it has been in operation are also very important.

When we have this information, we can compare the business valuation data of other businesses in the same industry to that of our client. There are a few especially important elements we will look at when reviewing your company’s performance.

Price Multiple

This is the scale for determining a company’s value that weighs its share price against its earnings per share (EPS). We can use price multiples to compare your company to businesses exactly like yours.

We can also use it to compare your company’s current performance to its previous performance. It will look at several factors that might affect your business, such as demographic changes in the area of a brick and mortar store, changes to the market, and changes to the economy.

Price-to-Book Values

The price-to-book ratio is used to compare the market capitalization to its book value. Market capitalization refers to the value of all of a company’s shares of stock. A book value is a company’s value minus intangible assets and liabilities. This is accomplished by dividing stock price per share by its book value per share (BVPS).

Price-to-free Cash Flow Metrics

The price-to-cash flow (P/CF) ratio is a way of valuing stocks. It determines the worth of a stock’s price compared to the amount of cash earned by a company’s normal business operations. This is known as the operating cash flow.

Predicting the Future Value of the Company

Unfortunately, there is no such thing as a crystal ball. However, there are ways that we can try and predict the future value of your company. After looking at the history of the business and its current strategy, we will try to predict future earnings, taxes, and expenses based on that data.

We will also look at changes to the law that might affect the valuation of your business. In some cases, there may be upcoming tax breaks offered to companies just like yours. In other cases, you may be losing tax breaks based on impending legislation.

Selecting a Valuation Method

There are several different valuation methods employed to determine a company’s worth. This is why the reason for the valuation is very important. There are three major types of valuation.

Cost

The cost approach assesses value by using the fair market value (FMV) of the net value of a business. It relies heavily on data from a company’s books. Traditional accountants use this approach. However, it does not consider intangible values, and it relies almost entirely on historical costs instead of future market value.

Market Approach

This bases the value of a business on recent sales of businesses like it. It is most often used for determining the worth of public companies. This is because you can find information on such companies in business newspapers.

Income Approach

This approach treats future expected cash flow and other gains into a present value. It is most often used for established businesses that have already made a profit.

Discount Any Liabilities

At this point, we will examine the disadvantages to the buyer. If a company is struggling at the time of sale, a discount may be applied. Suppose a company was associated with its owner’s brand. In that case, customers might stop patronizing the business, in which case the new owner may be given a discount for the temporary loss of profit.

The valuation companies use the latest technology to determine these elements and give you a final value.

FAQs

Why use us?

It might seem like an accountant could figure out how much your business is worth. However, an accountant will not be able to determine the future value of a business. A Neumann & Associates will write you a prospectus that is certain to pique the most hesitant buyers’ interest.

Is it expensive?

Although we do not give our services away, the valuation cost will most often be absorbed by the increased price you will get for your business. Regardless, a valuation typically costs less than the company’s annual tax return preparation.

We want to help you sell your business, so give us a call today.


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 to fill out a short 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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