Valuation Services

Determining a selling price for closely held companies is a challenge, best done by an experienced professional. By definition, private companies do not have a public trading market from which to assess their value. Further, private companies usually work to minimize taxes, leaving records of earnings that understate true value. 

Various methods for evaluation are used. A commonly used method multiplies earnings by some factor, but the ambiguity of "earnings" and the choice of the factor often results in a figure that is deceiving or not truly representative of a specific company’s value. Comparative sales of similar type companies are beginning to be compiled but matches are tenuous or often non-existent. The discounted cash flow method is helpful but SVI finds that the build-up, or excess earnings method, more closely highlights the uniqueness of each business. In this method, earnings are "normalized" or "stabilized" to reflect the true earning power of a company before adjustments for tax considerations. Once earnings are normalized and the valuation completed, SVI calculates "returns" on the buyer’s, first-year pro-forma to assure marketability. This results in a market valuation that can be defended by the numbers and reduces emotions during negotiations.

Let SVI show you how to get the most for your company and how to set up a secure future with the proceeds.

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