Business Sales & Purchases, Business Valuations, & Due Diligence Services
When selling their business or contemplating bringing in a new partner or shareholder, our clients rely on us to determine a fair and reasonable estimate of the value of their business. Overestimating the value can scare away potential buyers or investors, while underestimating can shortchange the existing owners. The Newman Group’s in-depth knowledge of your business enables us to provide a well-reasoned, fully documented and defensible estimate of its value, maximizing your return on investment.
The purchase of an existing business or merger can be fraught with problems, including overestimation of the value to achieve an unrealistic return for the seller. The Newman Group can (as part of the due diligence process in buying a business) prepare an estimate of the value to be used as one of your many tools in negotiating the price, structure, and terms of the acquisition.
Business valuation is not an exact science. It’s based on judgment, experience, and relevant information. Our approach is to intimately know your business in order to understand what constitutes its value. We work closely with you to analyze your operations and historical financial data, including the recasting of financial statements and tax returns to present a more realistic portrait of the results a buyer can expect. These recast financial statements and tax returns become the basis for calculating the estimated value of the business. As part of our procedures, we examine:
- Financial Statements and Tax Returns: no one overestimates their revenue and profits if it increases their tax liability, thus tax returns generally are the basis for evaluating the value of a company
- Sales: to determine whether there is reliance on one or more major customers that if lost would be devastating to the business
- Industry Standards: to determine the target company’s standing within the industry and how their financial statements compare to competitors
- Salary Structure: along with the consequences if key personnel were to resign should the company be acquired
- Business Plans, Budgets and Cash Flow Projections: to determine the reasonableness of assumptions or, if necessary, to prepare cash flow projections to determine what our client can reasonably expect
- Methods and Calculations: those used in valuing the business or to prepare our own estimate of the value
- Tax Implications: caused by the acquisition
- The Deal’s Structure: and if there is a more beneficial method to our client’s advantage