Corporate finance

Service descriptions for:

Business valuation
Business brokering and merger and acquisition services (transaction services)
Acquisition due diligence review

Business valuation

Benefit:

• Establish a clear value for an organization through an objective third party
  
  
• Protect both buyers and sellers of organizations in transition
  
  
• Avoid IRS setting the business value, which could result in additional taxes owed
  
  
• Often needed to meet regulatory requirements
  
  
• Help families set the value of a family-owned business

Who’s most likely to benefit:

• Any organization seeking to establish value for (among many possible reasons):
  
  
• Estate, inheritance or gift tax
• Mergers, acquisitions and spin-offs
• Cross-purchase and buy-sell agreements
• Values-based planning
• Employee stock ownership plans
• Litigation (such as divorces or domestic disputes)
• Minority shareholder interests
• Subchapter S elections
• Charitable contributions
• Personal financial statements
• Issuing stock

Description:

Business valuation is often described as both art and science. It combines both quantitative and qualitative information-gathering and analysis to reach a value for a business entity.

In any valuation, the valuator and client first agree on the scope and parameters of the valuation (for example: limited or full-scope, purpose and date of valuation, data to be supplied, type of reporting, whether the business is valued as an ongoing concern or for liquidation). Then, based on that agreement, the business valuation specialist reviews and analyzes the organization’s financial and operational data, including financial statements, tax returns, accounts receivable/payable, inventory, and budgets or forecasts. A valuation may include not only tangible assets, but intangible ones as well, so other materials such as the organizational chart and board of directors minutes may be part of the analysis.

At AGH, the valuation specialist also gathers data from sources outside the company, including industry trends, geographic or industry economic data, and data on sales of comparable businesses (“market comps”).

Using the data gathered, the business valuation specialist combines it with a number of additional factors (such as goodwill, competition, market share, industry trends and outlook) in a valuation model to reach a conclusion for the organization.

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Business brokering and merger and acquisition services (transaction services)

Benefit:

• Help qualified buyers and sellers through a transition of business ownership
  
  
• Manage the transaction from the opening introduction to the final closing
  
  
• Maximize benefit to client through negotiation and understanding of tax impact
  
  
• Serve as a credible, objective third party with expertise in business valuation, taxes, financing, market conditions, due diligence, ownership transfer and the financial and emotional consequences of business transitions

Who’s most likely to benefit:

• Owners of closely held or family-owned organizations which are:
  
  
• Thinking of selling a business
• Expanding and acquiring new assets
• Downsizing, spinning off or liquidating assets
• Transitioning to a different ownership structure
• Passing from one generation to another
• Merging or divesting
• Being purchased by management
• Considering a buyout of other owners
• Evaluating offers from potential buyers

Description:

Business brokers and merger and acquisition specialists (also called transaction specialists) at AGH serve as a one-stop resource for business owners seeking to buy, sell, merge, divest or transition their business smoothly and professionally, while maximizing its potential value. Each transition is unique, but generally, AGH works with a client to: (1) set goals for the transaction; (2) research and analyze the company’s operating history and financial results; (3) review data on comparable sales of similar companies to establish a favorable price; (4) prepare a professional business summary used to market the business; (5) search for and contact qualified buyers; (6) help evaluate each offer and (7) negotiate the business transaction agreement.

It’s a complex process best handled by experienced professionals with access to a range of tax, finance, valuation and other expertise, as well as specialized databases of market data. AGH works to increase value from the transaction and will be involved from beginning to end. Once the agreement is made, a business broker may perform services such as locating financing, coordinating due diligence, setting up the new ownership structure, and helping the new organization establish its financial and operational controls, technological structure and management systems, including review of employment agreements by a certified HR specialist.

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Acquisition due diligence review

Benefit:

• Allows a business buyer to make a more informed decision based on the risks, price and potential of the organization under consideration
  
  
• Creates a picture of the strengths, weaknesses, opportunities and threats of an organization from a financial viewpoint
  
  
• Provides third-party, objective expertise and information to assess a prospective acquisition’s fit with a buyer’s goals and organization

Who’s most likely to benefit:

Organizations or individuals considering a merger with or acquisition of another organization.

Description:

After letters of intent about the acquisition have been reached, a prospective buyer typically has a limited period of time in which to perform due diligence before closing the transaction. A buyer conducts thorough research into the target company’s financial and operational results to help establish an appropriate value, increase understanding of the asset to be purchased, and minimize potential risks and “after-the-purchase” surprises. The buyer identifies specific areas targeted for further in-depth scrutiny by AGH auditors, such as inventory, cash, or accounts payable.

Experienced AGH review team members then delve into those specific aspects of the target company’s business during due diligence.

The due diligence report may be used as a way to further refine price or terms of the purchase, or simply as a decision-making tool to help the buyer transition the acquisition’s ownership and/or management. Either way, the buyer will have a clearer picture of the organization under the microscope after a thorough due diligence review.

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