M&A Consulting

Identifying Value. Traditionally, when contemplating a sale or purchase of a business the business owner or prospective buyer is often advised to acquire a valuation. However, in many cases a traditional valuation is not the best starting point in the dynamic process of business sale transactions, where many factors including negotiations, deal terms and closing conditions will impact the final transaction price.

But let’s first step back.  Most prospective buyers of a business will base their maximum offering price on three basic components:

  • Current Cash Flow
  • Growth Prospects
  • Perceived Risk Factors

The first step in preparing to sell or buy a business is to identify the value drivers, as well as the factors that detract from value.  In planning for a sale, an immediate focus on these factors can potentially increase value in the near term.

percentageThe second step in analyzing a business’ potential value in the marketplace is to examine the earnings history with the objective of determining the true economic potential and earning power of the company. After all, the future cash flow stream is really what in effect is being purchased or sold.

The third step is to perform calculations to determine the length of time in which the future cash flow from the business will pay off any debt, as well as to return the original investment back to the buyer.

These and other factors will set a base to estimate a range of market pricing for the subject business.  Understanding the financing options of this particular business will also provide insight on the kind of deal terms a seller or buyer can anticipate.

Valda Karlsons, CPA/ABV/CFF, CVA, and principal of Karlsons & Associates, LLC, is uniquely qualified to assist in this process, having a broad, hands-on business background in addition to the technical qualifications in accounting and valuation.

Transaction Due Diligence

Karlsons & Associates, LLC provides transaction due diligence support services to keep the process on track and mitigate potential risks, either assisting in a limited role of specific requirements or working as part of your team throughout the deal process. Our support services include:

Pre-deal evaluation: identification of risks, potential deal breakers, evaluation of potential synergies, review of preliminary deal structures, financing and market pricing.

Benchmarking: analysis of competitive landscape and industry analysis, trend analysis, compiling strategic and commercial intelligence.

Financial Analysis: financial analysis of the target, financing options, deal structures, synergies, return on investment and existing operations.

We also work with several FINRA registered investment banking representatives that provide buy-side and sell-side advisory and transaction support services.