Appraisal and Assessment Services
Appraisals and Assessments for the Purpose of Establishing an Employee Stock Ownership Plan
ESOPs have many advantages. One of the more distinct advantages is that it allows an owner of a closely held firm to withdraw cash from the business without giving up control of the firm while deferring taxes on capital gains. To establish an ESOP, a value on the business must be placed, since it is the ESOP that will buy a percentage of the business from the owner. Grimes McGovern & Associates can provide an accurate and thoroughly researched valuation of your closely held business in order to best estimate fair market value prior to establishing an ESOP.
Appraisals and Assessments for Estate Planning
Valuing a closely held business is a mix of the subjective and the objective. There are a number of commonly accepted methods for valuing a business. These include: the multiple approach, income capitalization approach, discounted cash flow approach, and net asset value approach. Each approach has its own strengths and weaknesses. The objective is to determine what a willing buyer would pay a seller for the assets of that business. Yet, unlike their public company counterparts who are actively traded in the marketplace, closely held companies typically do not have values regularly established. To calculate the value of a closely held company, Grimes, McGovern & Associates uses both financial theory and practical experience. We look at markets conditions as well as numbers while taking into consideration intangibles such as key personnel, buyer activity, and the economy as a whole.
Establishing Fair Market Values as Part of an Owner Buyout Agreement
Companies that are owned by several principals typically enter into fair value buyout agreements at some point during their early growth years. Under these agreements, the business will purchase a principal’s share at fair market value. Agreements can be triggered by many factors including a principal’s desire to retire or simply disassociate him or herself from the business, a principal passes away or suffers a disability, or even disagreements over how the business is to be run. The primary issue typically focuses on what is the fair market value and who makes that determination. And, in most cases the business is valued from the perspective of how much it would bring in a sale. This can be a very contentious negotiation; one in which it helps to have an expert third party opinion. Grimes, McGovern & Associates will look at the numbers and the personnel behind those numbers, the market as a whole, competitive factors, and business trends. This allows us to make projections on where the business is headed, who the logical suitors may be or if there would be any suitors at all, and what resources might be needed to grow the business. This allows for the creation of a clearly established Buy/Sell agreement prior to the time of need. Which with a structured set formula for determining value will provide an accurate determination.
Valuation of Restricted Securities
Restricted securities are those shares or ownership positions that contain important restrictions on the ability of the holder to sell or exchange those securities. Restrictions limit the marketability of the security and their values are generally below those of non-restricted counterparts. The amount of the discount varies depending on the circumstances. Discounts typically range from 10% up to 75%, sometimes even higher.
Fairness opinions are provided for a variety of purposes including the sale of a Business
In the case of a sale to an outside party, placing a realistic and attainable value for the business is essential to achieving fair value. It is a critical step before the search is launched. Our associates bring diverse and highly successful backgrounds within newspaper and magazine publishing, global events, technology, digital media, and information services industries. We bring a unique understanding of the numbers and the ability to look beyond the operation itself. We track national as well as regional and local markets — every day — know who the movers and shakers are; who the potential suitors may be and what transaction value your target operation may bring. In addition, we carefully track similar transactions offering sellers the comparable transaction data this is critical in placing a value on the business.
Fairness opinions are put together utilizing a broad range of methods. These include:
- Complete review of all financial data
- Quantitative analysis of cash flows
- Quantitative analysis of accumulated assets
- Analysis of comparable companies and similar transactions
- Analysis of contributions
Due Diligence Support Services for Mergers and Acquisitions
Buyers have come to rely on our expertise in providing an objective analysis of what properties are worth and an objective opinion of what the benefits of the combination may be. The bottom line — M&A’s that do not create value more than the aggregation of the two separate organizations should not be undertaken. Distinguishing combinations that will create incremental value is a task that requires both insight and analytical skill. Our comprehensive due diligence services go well beyond the numbers. We carefully examine the target markets and opportunities for growing those markets, competitive factors that may influence those markets down the road, personnel, and production issues, while taking a good hard look at how the operation may fit. We’ll identify those items, particular to that company, which may affect its ability to increase profit.
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A confidential free business assessment
We offer an initial free assessment for owners of media properties. Just click on the property type, complete the confidential form to get started. We’ll contact you within 24 hours to review.
Grimes, McGovern, & Associates offers a unique initial free assessment for owners of media, events, information services and related businesses. Our impressive roster of clients have included company owners and investors, private equity firms from all parts of the information economy.
Join the hundreds of owners, both big and small, who have taken advantage of this free service. Click on your property type, take a couple minutes to fill out the confidential form to get started, and we’ll contact you within 24 hours to review.
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Free Business Assessment
Find out what your business is worth
We offer an initial free assessment for owners of media properties. Just click on the property type and complete the confidential form to get started. We’ll contact you within 24 hours to review.
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