Requires inputs from the following categories:
Income Statement
Balance Sheet
Growth Assumptions
Financing
Deal Structure
Taxation
Exit Strategy
Model simple transactions with no bank debt to complex deals involving mezzanine financing, balloon note, deferred payments, and over advance loans.
Revolver, Term Loan, Over Advance Loan, Loan with Deferred Principal, Balloon Loan, and Mezzanine financing with principal amortization and deferred principal payments.
Earn-out, Non-compete and Consulting payments.
Independent Real Estate financials and ROI analysis.
Deal structuring: Interactive pro-forma financials and what-if analysis of deal structures. (Deal Quantifier)
2. Optimal business valuation: Maximize value & minimize equity, subject to capital market constraints. (Deal Optimizer)
Growth can reduce value if business needs high working capital
Change in value is not hyperbolic but linear, due to debt service
Value reduces as CapX increases
Lower ROE translates to higher value, higher Equity needs, lower D/E ratio
Stock purchase can have a lower value compared to an Asset purchase
Generally, C Corp buyer pays a lower multiple
Pre-screen sellers
Develop ideal buyer profile
Manage buyer/seller expectations
Analyze LOI & deal structures
Work with lenders
Avoid deal crashes
Recover cratered deals
Quantify synergies
Sanity check of a full report valuation
Cash Value vs. Leveraged Valuation
Buy-side advisory work: structure and what-if analysis
Reinforce FMV analysis with justification of purchase
Asset vs. Stock purchase valuation
C Corp vs. S Corp valuation
Determine trade-offs between growth, profitability, and working capital
Determine impact of gains in productivity and well-managed CapX
Quantify benefits of quality financials
Quantify benefits of consistent profits
Explain the impact of growth