Dennis Giangregorio, CPA, CVA contributed to the NH Business Review this month for their Ask the Experts section on Valuations.
"Q. Why would I need a business valuation?
As of the most recent census, data shows that the average age of a New Hampshire resident is 43.4 years, which makes New Hampshire the second oldest state in the nation. Further, a full 29% of New Hampshire residents are between the ages of 50 and 69.
This is a hard-working group made up of innovators, entrepreneurs and business owners who are in their peak earning years. Some business owners may be looking to expand and others may be exploring exit strategies — in either case, business valuation services will prove to be an essential decision-making tool."
"Q. Why would I need a business valuation?
As of the most recent census, data shows that the average age of a New Hampshire resident is 43.4 years, which makes New Hampshire the second oldest state in the nation. Further, a full 29% of New Hampshire residents are between the ages of 50 and 69.
This is a hard-working group made up of innovators, entrepreneurs and business owners who are in their peak earning years. Some business owners may be looking to expand and others may be exploring exit strategies — in either case, business valuation services will prove to be an essential decision-making tool."
"Q. How does the valuation fit into my expansion or exit strategy?
For those business owners who are expanding their businesses through merger or acquisition activity, a business valuation can certainly provide a fair market value for the target business. However, there are additional services that a valuation analyst can provide which will be invaluable for business owners. Due diligence procedures will ensure that the entity’s financial reporting provides a complete picture of its operating results. A quality of earnings report can be produced that will provide the stakeholders in a business transaction with a detailed analysis of revenues and expenses and expert findings and recommendations that may arise. In some cases, buyers use financing through banks or the Small Business Administration, and a valuation report could be required by the lender.
Certain business owners may be looking at options for selling their business or transitioning ownership to current business partners or family members. These business owners should discuss their goals with the valuation analyst to determine how the valuation report will be used. Based on their decision, the analyst will provide a report to be used in a sale transaction, or for use with gift and estate tax reporting requirements.
Q. What should I expect in my valuation engagement?
Business valuation reports come in many different forms depending on how the value is going to be used. Business owners should expect to have a detailed conversation with the analyst regarding the scope and use of the valuation report. Additionally, business owners will be asked to provide up to five years of historical financial reporting information, tax returns, budget versus actual reports and any projections that management has created. An analyst will generally spend time on-site and perform interviews with owners and several key employees. At the conclusion of the engagement, the business owner should walk away with, not just a fair value, but insight into operational risks and the drivers of enterprise value."
You can find the full article in print form as part of their current issue or find it online here (pg 22).
For those business owners who are expanding their businesses through merger or acquisition activity, a business valuation can certainly provide a fair market value for the target business. However, there are additional services that a valuation analyst can provide which will be invaluable for business owners. Due diligence procedures will ensure that the entity’s financial reporting provides a complete picture of its operating results. A quality of earnings report can be produced that will provide the stakeholders in a business transaction with a detailed analysis of revenues and expenses and expert findings and recommendations that may arise. In some cases, buyers use financing through banks or the Small Business Administration, and a valuation report could be required by the lender.
Certain business owners may be looking at options for selling their business or transitioning ownership to current business partners or family members. These business owners should discuss their goals with the valuation analyst to determine how the valuation report will be used. Based on their decision, the analyst will provide a report to be used in a sale transaction, or for use with gift and estate tax reporting requirements.
Q. What should I expect in my valuation engagement?
Business valuation reports come in many different forms depending on how the value is going to be used. Business owners should expect to have a detailed conversation with the analyst regarding the scope and use of the valuation report. Additionally, business owners will be asked to provide up to five years of historical financial reporting information, tax returns, budget versus actual reports and any projections that management has created. An analyst will generally spend time on-site and perform interviews with owners and several key employees. At the conclusion of the engagement, the business owner should walk away with, not just a fair value, but insight into operational risks and the drivers of enterprise value."
You can find the full article in print form as part of their current issue or find it online here (pg 22).
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