The Waterfront Group

Company Valuations

As a business owner, your company represents a great source of pride, as well as income, to you and your family. Your decision to sell is a very important one, and will likely be based upon a number of key considerations, including the anticipated price, terms, and net proceeds of the sale.

To prepare our clients for the sale process, the professionals at The Waterfront Group will provide a fair market valuation analysis that establishes a reasonable range of value for your business. This “go to market” valuation range considers a number of valuation factors, including

History/trend of Revenues (increasing is better)
History/trend of Cash flows (increasing is better)
Size of Cash flows (relative to other similar businesses, and also in absolute terms)
Marketability of the business (is there a ready market, or limited buyer universe)
Degree of Competition (how does the company stack up to existing players)
Ease of entry into business
Industry trends
Growth opportunities for the business
Unique Assets (differentiators, like people, processes, licenses, exclusivity agreements)
Location and Facilities (will a new owner need to inject additional capital to modernize)
Amount of risk (eg, heavy seasonality, customer/supplier concentration)
Motivation and Flexibility of the parties
ROI and income objectives for the buyer
Comparable Sales Data

These and other factors will be used to generate a cash flow multiplier for your business. Before we proceed with a client (seller) engagement, we will consult with the owner, and frequently their CPA, to ensure there is an agreement as to the fair market valuation.

To request a valuation, The Waterfront Group will require three years financials statements and Federal tax returns from the seller. These will be used to determine the owner’s discretionary cash flow (ODC), also known as adjusted net income for the business. Taken together, the adjusted net income and cash flow multiplier determine the valuation range for the business.

Ultimately, the final consideration paid reflects the parties’ respective motivations, goals, and non-price terms of sale. At The Waterfront Group, our goal is to obtain the best combination of price and terms that meet our clients’ objectives, in the shortest amount of time, while maintaining clients’ confidentiality throughout the process.