Our Valuation Approach

There is no simple formula for making business valuations. Each appraisal is as unique as the company it describes.

Since most privately-held companies are sold confidentially, information on comparable transactions is limited. Moreover, factors such as size, customer concentration and loyalty, regional trends, competitive advantages, management strength and company growth potential can have a significant difference on valuation – even within an industry.

The first step in performing a business valuation is the restatement of financial/operating results to remove the owner’s discretionary expenses and reveal the company’s true earnings. The result is a summary of Earnings Before Interest, Taxes, Depreciation and Amortization (or EBITDA).

Buyers generally evaluate potential acquisitions/investments on the basis of their earnings and assets, in conjunction with the buyers' desired return on investment (ROI). Buyers' desired ROI reflects their perception of growth or risk along with the predictability and stability of expected future earnings.

Another factor that influences valuations is the availability of bank financing, since the majority of business acquisitions are financed. Different lenders have their own approaches to valuing companies and transaction structures need to fit within lenders' formulas in order to be financeable.

ASG values companies using the same methods employed by prospective buyers. Because we are constantly working with buyers and lenders on successful transactions, and because ASG Principals have extensive experience in private company operations, we are able to project an accurate value range for each of our clients – based upon the conditions in the market and the specifics of the company.

If you are interested in learning the value of your company, please Email or call us. ASG Partners performs valuations confidentially and at no cost.

Once a seller decides he or she is ready to put his company on the market, we move on to the Packaging stage.