Pacific Mergers and Acquisitions’ valuation department has been performing valuations for almost 20 years when, in the absence of useful tools to assist in determining the true market value of a business/company Pacific Mergers and Acquisitions developed its own valuation software (fat-software.com). Since its inception, Pacific Mergers and Acquisitions boasts a high level of accuracy in its interpretation of what buyers would be prepared to pay for the business/company affording its clients the opportunity to assess the reality of their expectations and determine if they prefer to “Stay and Grow or Sell and Go”.
A proper valuation considering the purpose thereof, is essential when selling a business/company for multiple reasons including:
1. Company Owner Expectations Check:
Accuracy in interpreting what the market would deem the value of one’s company/business to be is essential in assessing one’s own expectations. Should there be a gap in value between the assessment and one’s expectations, value building or value creation action can be initiated in order to bring the value in line with the expectations. Whether a valuation is under one’s expectations, or over, it is important to consider such gaps in order to not waste opportunities or leave money on the table.
Besides reasonable assumptions and considerations, a proper valuation must take into account various factors such as historical performance, future projections, efficiencies, assets, liabilities, market conditions and economic environments, growth opportunities, possible synergies, return on one’s investment, risk, potential, industry trends, and multiple value drivers to arrive at an objective price.
2. Buyer Trust:
Aside from a good fit from both a seller and a buyer’s perspective, a potential buyer is likely to be much more trusting of the value they receive for the anticipated purchase, if they can trust that its value has been accurately assessed and the expectations are realistic. A proper valuation also helps one understand the value drivers and also to justify the expected price to a buyer at times of need or where a negotiation takes place relative to value. Such buyer trust will also enhance the sell side negotiating power.
3. Maximize Return on One’s Often Lifetime Investment:
Selling a business/company is often driven by the desire to maximize return on investment while exiting at an opportune time. A proper valuation helps identify areas where improvements can be made before selling, in order to increase and maximize the business’/company’s overall value.
Pacific M&A’s business valuation department operates autonomously from the advisory side in order to ensure the valuations are arrived at objectively, with no advisor influence and as a true interpretation of the real market value we call the “Most Probable Selling Price”. This comprehensive process considers the financial parameters and key value drivers in a “value-gap analysis”, providing owners with clear insights into which factors need focus to enhance and maximize the value of their strategic transaction.
Let Pacific Mergers and Acquisitions guide you through the intricacies of valuation, ensuring you make data backed informed decisions to achieve optimal outcomes.
Why Business Valuations Are Important
Mergers and Acquisitions
A precise business valuation ensures that both buyers and sellers have a fair and objective assessment of the company’s worth. This helps in negotiating fair terms, securing financing, and ensuring a smooth transaction process.
Successful Exit Planning
For business owners planning to sell their business, an accurate valuation is critical for maximizing the return on their investment. It helps in setting a realistic asking price, attracting potential buyers, and facilitating a successful exit strategy that aligns with their financial goals.
Informed Decision-Making
Business valuations provide a clear and accurate understanding of a company’s financial health and market position. This information is essential for making informed strategic decisions, whether it’s for growth planning, restructuring, or evaluating potential investment opportunities.
Securing Financing
A thorough business valuation is essential when trying to secure loans or attract investors. Lenders and investors rely on accurate valuations to assess the risk and potential return on investment. This transparency and detailed financial insight make it easier for businesses to obtain necessary funding.