tvg business valuation - the vant group · 2018-07-14 · tvg’s valuation methodologies, used to...

Private & Strictly Confidential

The Vant Group 17766 Preston Road Telephone: (972) 458-8989 Dallas, TX 75252 Fax: (972) 458-7342 Website: www.thevantgroup.com

Prepared For: ABC Company

TVG Business Valuation


1. Provisions and Conditions

2. Business Valuation

3. Comparative Financial Analysis

4. Comparable Companies and Transactions

5. Tax Returns

6. Financial Statements

7. TVG Questionnaire

8. The Vant Group Overview

Table of Contents


Provisions and Conditions Section 01


Departure Provisions

This is a business valuation and not an appraisal. There is a significant difference between an opinion

letter and an appraisal. Specifically, our valuation analysis did not include strict adherence to USPAP

(Uniform Standard Professional Appraisal Practices) standards, such as:

a) A comprehensive financial statement analysis, including Income Statements, Balance Sheets

and Cash Flows, containing appropriate adjustments to those statements as necessary.

b) An industry analysis/and research of the capital markets compared with the valued company's

financial statements to derive discount and capitalization rates.

c) A certifying cover letter with the evaluator's signature.

TVG’s valuation methodologies, used to arrive at the 'range of value', are based on hundreds of

evaluations performed since 1999 by its principals who have been themselves business brokers,

business buyers, and business sellers in real world buy/sell situations. The Opinion Letter range of

value, although not considered a formal appraisal, has been relied upon by the brokers, which make up

the largest broker organization in the world.

Contingencies and Limiting Conditions

This Opinion Letter has been prepared subject to the following conditions:

1. This letter has been prepared for and is to be used only for the purpose outlined. It may not be

reproduced in whole or in part without the written consent of the client or the evaluator and, in any

event, only with the proper attribution. We are not required to give testimony in court, or be in

attendance during any hearings or depositions, with reference to the company being valued, unless

previous contractual arrangements have been made.

2. We have relied on the financial information provided to our client as furnished by the company.

We have accepted this information as true and correct.

3. Information, estimates, and opinions contained in this letter are obtained from sources considered

to be reliable. However, we assume no liability for such sources.

4. It is assumed that there are no significant adverse circumstances nor any substantial contingent or

undisclosed liabilities other than those described in this letter that would tend to have a severe

impact on the value of the businesses and that there are no known undisclosed circumstances that

would require a buyer of the companies to make a substantial investment other than the purchase

price. The various estimates of value presented in this letter apply to this evaluation only and may


not be used out of the context presented herein. This evaluation is valid only for the purposes

specified herein.

5. Our letter does not take into consideration the existence of toxic, hazardous or contaminated

substance or materials, and the cost to a prospective buyer of removing such items, and follow up

treatments to the subject properties as well as a potential share of clean-up costs for non-affiliated

companies.

6. The historical financial information presented in this letter is included solely to assist in the

development of the range of value conclusion of this letter, and it should not be used to obtain

credit or for any other purpose. Because of the limited purpose of this presentation, it may be

incomplete and contain departures from generally accepted accounting principles.

All information in this letter has been provided by our client and is assumed to be reliable. No verification of the information has been done by TVG, nor has TVG made an inspection or on site visit of the business premises or facilities


Appendix 1 — Certification I certify that, to the best of my knowledge and belief: The statements of fact contained in this report are true and correct.

The reported analyses, opinions and conclusions are limited only by the reported assumptions and

limiting conditions and they are my personal, impartial and unbiased professional analyses, opinions and conclusions.

I have no present or prospective interest in the property that is the subject of this report, and I have no

personal interest with respect to the parties involved. I have performed no services, as an appraiser or in any other capacity, regarding the property that is the

subject of this report within the three-year period immediately preceding acceptance of this assignment. I have no bias with respect to the property that is the subject of this report or to the parties involved with

this assignment. My engagement in this assignment was not contingent upon developing or reporting predetermined

results. My compensation for completing this assignment is not contingent upon the development or reporting

of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

Anthony Cullins provided significant assistance in the areas of research, analysis and report writing.

Alex Vantarakis President


Business Valuation Section 02


January 24, 2017 ABC Company Street Address Dallas, Texas 75231 Dear Client Name, We have completed our review of ABC Company (“Company”) as of the date of this letter (“Valuation Date”). Based on the information available to us, including the Company’s historical financial statements compiled on a cash basis through 12/31/2015 and 2016 financial figures on an accrual basis, we estimate its value to be $ 3,460,000. The Company is located at Street Address, Dallas, Texas 75231. The Company can be categorized under the North American Industry Classification System (NAICS) Code of 524210 – Insurance Agencies and Brokerages. Established in 1993, the Company is an independent marketing organization that delivers value to both advisors and customers by providing timely information on estate planning and insurance related matters. The following revenue and cash flow figures were used to determine the range of value:

The below table is a summary of company value based on a comparable companies/transactions method:

Assigned Weightings

2016 $1,973,145 10% 2016 $370,851 2015 $1,971,280 50% 2015 $424,731 2014 $2,159,319 30% 2014 $508,668 2013 $1,940,546 10% 2013 $311,079

Used for Valuation $2,024,805 100% Used for Valuation $433,159

Revenue Adjusted EBITDA

WeightCash Flow 7.85 Cash Flow Multiple $3,400,298 80%Revenue 1.82 Revenue Multiple $3,685,145 20%

Comparable Companies MethodMultiple Applied Value as Calculated By:

Weight Value

Cash Flow Valuation 80% 3,400,298$ Revenue Valuation 20% 3,685,145$ Total Value of Company 100% 3,457,267$

Total Value Calculation Valuation Method


Comparative Company Method

The notion behind the comparative company method is that prices of publicly traded stocks in the same or a similar industry provide objective evidence as to values at which investors are willing to buy and sell interests in companies in that industry. In applying the comparative company valuation method, the consultant usually computes a value multiple for each comparative company. The appropriate multiple is then determined and adjusted for the unique aspects of the company being valued. This multiple is then applied to the company being valued to arrive at an estimate of value for the appropriate ownership interest. A value multiple represents a ratio that uses a comparative company's price as the numerator and a measure of the comparative company's operating results (or financial position) as the denominator. The most well-known value multiple is price/earnings (P/E) whereby a company's price is divided by its earnings. The process of computing the value multiples normally consists of the following procedures:

1. Numerator: determine the appropriate price for each comparative company. 2. Denominator: determine the measure of operating results (earnings, gross cash flow, etc. ) for

the appropriate time period or financial position as of the valuation date. The application of this method depends on the selection of publicly traded and/or privately held comparative companies that are similar enough to the Company so as to provide a meaningful comparison. The following is a discussion of the search for comparatives for this Company. Search for Comparatives

This set of selected precedent transactions exhibits the following range of valuation multiples:

Target

Market Value of Invested Capital

Revenue Cash Flow CF Margin CF MultipleRevenue Multiple

Company 1 5,602,000$ 2,252,000$ 721,000$ 32% 7.77x 2.49xCompany 2 6,300,000$ 1,795,143$ 795,223$ 44% 7.92x 3.51xCompany 3 1,960,000$ 1,225,493$ 198,219$ 16% 9.89x 1.60x

Maximum 6,300,000$ 2,252,000$ 795,223$ 44% 9.89x 3.51x75th Percentile 5,951,000$ 2,023,572$ 758,112$ 38% 8.91x 3.00xMedian 5,602,000$ 1,795,143$ 721,000$ 32% 7.92x 2.49x25th Percentile 3,781,000$ 1,510,318$ 459,610$ 24% 7.85x 2.04xMinimum 1,960,000$ 1,225,493$ 198,219$ 16% 7.77x 1.60x


Price to Cash Flow Mutiple

The subject company has experienced lower than average EBITDA margins relative to the guideline listed companies as a group. The average cash flow margin for the years 2013 – 2016 was 20.0%, versus an average of 31% for the guideline companies. We selected a multiple (7.85x) that represents the 25th percentile, or occurs midway between the two lower CF multiples, because the higher cash flow multiple of 9.9 is an outlier in this limited data set.

Price to Revenue Multiple

The Total Entity Value of the Company based on the Price to Revenue Multiple method is estimated to be $3,690,000. Many buyers in the insurance brokerage industry perceive that for a given “book of business,” they already know how much they can expect to bring to the bottom line. In the Price to Revenue Multiple method, Net Revenue from the weighted average of the most recent four historic years times the Price to Revenue Multiple of 1.82x equals the estimate of Total Entity Value. Given the relatively lower margins for the subject company, we selected a multiple of 1.82, mid-way between the low multiple and the 25th percentile, and also a proportionate distance between the two lowest revenue multiples and their respective cash flow margins.

Year Value Weight CF Margin

2016 370,851$ 10% 18.8%2015 424,731$ 50% 21.5%2014 508,668$ 30% 23.6%2013 311,079$ 10% 16.0%

Weighted Average 433,159$ Multiple Applied 7.85x Cash Flow Valuation 3,400,298$

Price to Cash Flow Multiple

Price to Revenue Multiple

Year Value Weight

2016 1,973,145$ 10%2015 1,971,280$ 50%2014 2,159,319$ 30%2013 1,940,546$ 10%

Weighted Average 2,024,805$ Multiple Applied 1.82x Revenue Valuation 3,685,145$


Allocation of Value

A goodwill allocation reflects the value of a business as a going concern above and beyond its net asset value. Net asset value is calculated as total assets minus total liabilities. Net asset value is also called book value or shareholder equity.

Even though two businesses may seem very similar, they may be worth very different prices when all of the facts are clearly understood. Some indications of high value are: substantial and consistent cash flow over several years, good growth in the industry, a competitive advantage, a diverse client base, low industry failure rates, a good management team in place, and well-maintained asset base considered to be up to current industry standards. Obviously, a company with a poor industry outlook, limited customer base, a poor ratio of cash flow to assets, heavily indebted, or with little to no profitability will have a negative effect on potential buyers. The below table lists some generic factors which increase or decrease business value:

Increase Value Decrease Value

Organized Up-to-Date Financials Incomplete or Inaccurate Records Annual Increasing Sales Un-provable Owner Perks

Key People Unreported Cash Systems and Structures Bad Attitude of Seller – Unmotivated Seller

Formal Business and Marketing Plans Questionable Reason for Selling Organizational Charts and Job Descriptions Large Working Capital Needed

Strong Sales Force Poor “curb appeal” Cross Trained Employee Base Bad location

Owner Removed from the Business Large Customer Concentration Reduced Owner Perks Weak Infrastructure

Diverse Long-Term Client Base Inconsistent Yearly Financial Performance Intellectual Property Declining Sales

Proprietary Products and Processes No Sales Force Good location No Formalized Business Plan

Well Designed Website Poor/unclean Appearance Good Internal Layout Lack of Key Employees

Good Overall Appearance Weak Advertising or Marketing

* Book value was determined based off 2015 Balance Sheet. A most recent Balance Sheet wasn't provided to us.

Total Value of the Company $3,417,596 Book Value on Balance Sheet *Goodwill Allocation

$124,291 $3,293,305


Please read this entire letter and the full attached report carefully. Doing so will help you to avoid many of the pitfalls that we see business owners make when they try to optimize the value of their business. Over-pricing and improper terms keep most businesses from ever successfully selling. We believe that if you follow these recommendations, you will be much more likely to successfully complete a sale at the best price obtainable in the market place. We sincerely thank you for this opportunity. It was our privilege to review this business on your behalf. Should you have questions after reading this letter and after examining this report, please contact us at (972) 458-8989. Best Regards,

Alex Vantarakis President


Comparative Financial Analysis Section 03


ABC CompanyComparative Income Statement (Cash Basis)

2013 2014 2015 2016

Tax Return Tax Return Tax Return

Financial

Statement

Sales 1,940,546$ 2,159,319$ 1,971,280$ 1,973,145$ Cost of Goods Sold - 0.0% - 0.0% - 0.0% - 0.0%Net Gain - 0.0% - 0.0% - 0.0% - 0.0%Other Income 31,046 1.6% 33,873 1.6% 33,890 1.7% 37,562 1.9%

Gross Profit 1,971,592$ 101.6% 2,193,192$ 101.6% 2,005,170$ 101.7% 2,010,707$ 101.9%

Operating Expenses7. Compensation of Officers 300,000 15.5% 300,000 13.9% 100,000 5.1% - 0.0%8. Salaries and Wages 504,949 26.0% 486,986 22.6% 495,636 25.1% 516,869 26.2%9. Repairs & Maintenance - 0.0% - 0.0% - 0.0% - 0.0%10. Bad Debt Expense - 0.0% - 0.0% - 0.0% - 0.0%11. Rent 90,621 4.7% 96,281 4.5% 63,449 3.2% 69,625 3.5%12. Taxes & Licenses 71,584 3.7% 68,056 3.2% 58,670 3.0% 49,457 2.5%13. Interest - 0.0% - 0.0% 1,832 0.1% - 0.0%14. Depreciation 2,132 0.1% 1,870 0.1% - 0.0% - 0.0%15. Depletion - 0.0% - 0.0% - 0.0% - 0.0%16. Advertising 3,445 0.2% 2,160 0.1% 4,247 0.2% 4,898 0.2%17. Pension, Profit Sharing - 0.0% - 0.0% - 0.0% - 0.0%18. Employee Benefit Programs 83,384 4.3% 63,794 3.0% 79,466 4.0% 72,658 3.7%19. Other Deductions 906,530 46.7% 967,247 44.8% 878,971 44.6% 926,348 46.9%Total Operating Expenses 1,962,645$ 101.1% 1,986,394$ 92.0% 1,682,271$ 85.3% 1,639,856$ 83.1%

Income from Operations 8,947$ 0.5% 206,798$ 9.6% 322,899$ 16.4% 370,851$ 18.8%

Lender's CalculationOwner Salary 300,000 15.5% 300,000 13.9% 100,000 5.1% - 0.0%Interest - 0.0% - 0.0% 1,832 0.1% - 0.0%Depreciation 2,132 0.1% 1,870 0.1% - 0.0% - 0.0%Amortization - 0.0% - 0.0% - 0.0% - 0.0%

Bankable EBITDA 311,079$ 16.0% 508,668$ 23.6% 424,731$ 21.5% 370,851$ 18.8%

Disclaimer : 2016 financial figures have benen presented to us only in accrual basis rather than cash


ABC CompanyComparative Balance Sheet (Cash Basis)

2013 2014 2015Tax Return Tax Return Tax Return

AssetsCurrent Assets

Cash 79,055 84,308 82,766 Total Current Assets 79,055$ 84,308$ 82,766$

Fixed AssetsBuildings and Other Depreciable Assets 131,865 134,106 135,933 Less: Accumulated Depreciation (82,205) (86,316) (89,975)

Net Fixed Assets 49,660$ 47,790$ 45,958$

Total Assets 128,715$ 132,098$ 128,724$

Liabilities & Shareholder EquityCurrent Liabilities

Other Current Liabilities 3,488 3,903 4,433 Total Current Liabilities 3,488$ 3,903$ 4,433$

Shareholder EquityCapital Stock 1,553 1,553 1,553 Retained Earnings 123,674 126,642 122,738

Total Shareholder Equity 125,227$ 128,195$ 124,291$

Total Liabilities and Equity 128,715$ 132,098$ 128,724$


ABC CompanyGraphs: Page 1 of 2

$1,940,546

$2,159,319 $1,971,280 $1,973,145

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

2013 2014 2015 2016

Comparative Annual Revenue

Year

Rev

enue


ABC CompanyGraphs: Page 2 of 2

$311,079

$508,668

$424,731

$370,851

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2013 2014 2015 2016

Comparative Annual Adjusted EBITDA

16.03%

23.56%21.55%

18.79%

0%

5%

10%

15%

20%

25%

2013 2014 2015 2016

Comparative Annual Adjusted EBITDA as a % of Sales

Ann

ual A

djus

ted

EB

ITD

A (%

)

Year

Year

Adj

uste

dEB

ITD

A


ABC CompanyHistorical Financial Ratios

2013 2014 2015Tax Return Tax Return Tax Return

Liquidity Ratios Current 22.7 21.6 18.7Quick 22.7 21.6 18.7

Asset Management Ratios

Fixed Asset Turnover 39.08 45.18 42.89Total Asset Turnover 15.1x 16.3x 15.3x

Debt Management Ratios Debt to Capital 3% 3% 3%Debt to Equity 3% 3% 4%

Profitability Ratios Return On Invested Capital (ROIC) 7.1% 161.3% 16.4%Return on Assets (ROA) 7.0% 156.5% 250.8%Return on Equity (ROE) 7.1% 161.3% 259.8%

Definitions

LiquidityCurrentQuick

Asset ManagementFixed Asset TurnoverTotal Asset Turnover

LeverageDebt to CapitalDebt to Equity

ProfitabilityReturn On Invested Capital (ROIC)Return on Assets (ROA)Return on Equity (ROE)

Description

Ability to pay current obligations (those maturing within the next year)Ratio of current assets to current liabilitiesAbility to pay current liabilities without selling inventoryHow effectively a firm is utilizing its assetsMeasures how effectively a firm uses its property, plant, and equipmentMeasures the efficiency of a firm's use of its assets in generating How a firm financed its assets (debt &/or equity)Measures the percentage of the firm's capital provided by lendersMeasures the firm's financial leverageCash flows generated by assets and the financing of those assetsMeasures the annual return generated on debt and equityIndicates how profitable a company is relative to its total assetsIndicates how profitable a company is relative to its total equity


Comparable Companies and Transactions Section 04

Pratt's Stats Transaction Report

https://data.bvresources.com/PSAdvSearchDetailRpt.asp?tid=34320[1/21/2017 5:08:16 PM]

Pratt's Stats Transaction Report Prepared: 1/21/2017 3:08:09 PM (PST)

Seller Details

Company Name: N/A

Business Description: Insurance Agency Selling Property, Casualty, Life and Health

Sale Location: IA, United States Years in Business: 35

Sale Region: West North Central Number Employees: N/A

Company Type: S Corporation

SIC Codes6411 - Insurance Agents, Brokers, and Service

NAICS Codes524210 - Insurance Agencies and Brokerages

Source Data

Broker Name: Weber, Greg

Broker Firm Name: BCC Advisers

Contact Broker (Retrieve broker contact informationfrom BVR's "Find a Broker" database.)

Transaction Data

Date Sale Initiated: N/A

Date of Sale: 6/1/2015

Days to Sell: N/A

Asking Price: N/A

Market Value of Invested Capital: $5,602,000

Debt Assumed: $0

Amount of Down Payment: $5,602,000

Stock or Asset Sale: Stock

Transaction Costs: N/A

Income Data

Data is "Latest Full Year" Reported Yes

Data is Restated (see Notes for anyexplanation)

No

Income Statement Date 5/31/2015

Net Sales $2,252,000

COGS $0

Gross Profit $2,252,000

Yearly Rent $103,000

Owner's Compensation N/A

Other Operating Expenses $1,428,000

Noncash Charges $16,000

Total Operating Expenses $1,547,000

Operating Income $705,000

Interest Expense $15,000

Interest Income $0

Other Expense $0

Other Income $0

Earnings Before Taxes $690,000

Tax Expense $0

Tax Benefit $0

Net Income $690,000

Balance Sheet Data

Balance Sheet Date 6/1/2015

Cash Equivalents $224,000

Trade Receivables $152,000

Inventory $0

Other Current Assets $0

Total Current Assets $376,000

Fixed Assets $247,000

Real Estate $147,000

Intangibles $5,391,000

Other Noncurrent Assets $81,000

Total Assets $6,242,000

Current Liabilities $640,000

Long-term Liabilities $0

Total Liabilities $640,000

Stockholder's Equity $5,602,000

Purchase Price Allocation Data

PPA Date 6/1/2015

Cash Equivalents $0

Trade Receivables $0

Inventory $0


Total Current Assets $0

Fixed Assets $0

Real Estate $0

Identifiable Intangibles

Customer Related $3,677,000

Backlog $0

Developed Technology $0

In-Process R & D $0

Tradenames/marks $116,000

Non-Compete $85,000

Other Intangibles $0

Total $3,878,000

Goodwill $1,724,000

Total Intangibles $5,602,000

Other Noncurrent Assets $0


Interest-Bearing Liabilities $0

Total Liabilities $0

Additional Transaction Information

Deal Terms: Consideration: Cash in the amount of $5,602,000.

Was there a Note in the consideration paid? No

Was there a personal guarantee on the Note? No

Amount Seller Financed: $0

Was there a Noncompete Agreement? Yes

Noncompete Value: $85,000

Noncompete Length (Months): 60

Was there an Employment/Consulting Agreement? No

Employment Agreement Value: $0

Assumed Lease (Months): N/A

Terms of Lease: Real estate was acquired in a separate transaction

Noncompete Agreement: 300 mile radius

NOTE: Please Print to Legal Size Paper for Best Results

https://data.bvresources.com/BrokerFind.asp



Employment/Consulting Agreement: N/A

Additional Notes: N/A

Valuation Multiples

MVIC/Net Sales 2.49

MVIC/Gross Profit 2.49

MVIC/EBITDA 7.77

MVIC/EBIT 7.95

MVIC/Discretionary Earnings N/A

MVIC/Book Value of InvestedCapital

1.00

ProfitabilityRatios

Net Profit Margin 0.31

Operating Profit Margin 0.31

Gross Profit Margin 1.00

Return on Assets 0.11

Return on Equity 0.12

Leverage Ratios

Fixed Charge Coverage 47.00

Long-Term Debt to Assets 0.00

Long-Term Debt to Equity 0.00

Earnings

EBITDA $721,000

Discretionary Earnings N/A

Gross Cash Flow $706,000

Liquidity Ratios

Current Ratio 0.59

Quick Ratio 0.59

Activity Ratios

Total Asset Turnover 0.36

Fixed Asset Turnover 9.12

Inventory Turnover N/A

N/A = Not Available

Copyright © 2017 Business Valuation Resources, LLC. All rights reserved.1-503-291-7963




Seller Details

Company Name: N/A

Business Description: General Insurance

Sale Location: FL, United States Years in Business: 10

Sale Region: South Atlantic Number Employees: 7




Source Data

Broker Name: N/A

Broker Firm Name: N/A


Transaction Data

Date Sale Initiated: 2/19/2015


Days to Sell: 99

Asking Price: $6,400,000


Debt Assumed: $0


Stock or Asset Sale: Asset


Income Data



No



COGS $0

Gross Profit $1,795,143

Yearly Rent $66,000

Owner's Compensation $81,516

Other Operating Expenses N/A

Noncash Charges $10,138

Total Operating Expenses $1,010,058


Interest Expense $5,122

Interest Income $0

Other Expense N/A

Other Income $0

Earnings Before Taxes $752,963

Tax Expense $0

Tax Benefit $0

Net Income $752,963

Balance Sheet Data

Balance Sheet Date N/A

Cash Equivalents N/A

Trade Receivables N/A

Inventory N/A

Other Current Assets N/A

Total Current Assets N/A

Fixed Assets N/A

Real Estate N/A

Intangibles N/A

Other Noncurrent Assets N/A

Total Assets N/A

Current Liabilities N/A

Long-term Liabilities N/A

Total Liabilities N/A

Stockholder's Equity N/A


PPA Date 5/29/2015

Cash Equivalents $0


Inventory $0




Real Estate $0


Customer Related N/A

Backlog N/A

Developed Technology N/A

In-Process R & D N/A

Tradenames/marks N/A

Non-Compete N/A

Other Intangibles N/A

Total N/A

Goodwill N/A












Noncompete Value: N/A


Was there an Employment/Consulting Agreement? Yes


Assumed Lease (Months): N/A

Terms of Lease: Rent is $5,500/month, the lease expires on 12/31/2017, the building is 4,200 sq ft.

Noncompete Agreement: 50 miles radius





Employment/Consulting Agreement: 4 week transition training

Additional Notes: Transaction submitted by a member of the Business Brokers of Florida BBF. This business was sold in Palm Beach county.

Valuation Multiples

MVIC/Net Sales 3.51


MVIC/EBITDA 7.92

MVIC/EBIT 8.02

MVIC/Discretionary Earnings 7.19


N/A

ProfitabilityRatios

Net Profit Margin 0.42



Return on Assets 0.12

Return on Equity N/A

Leverage Ratios

Fixed Charge Coverage 153.28

Long-Term Debt to Assets N/A

Long-Term Debt to Equity N/A

Earnings

EBITDA $795,223

Discretionary Earnings $876,739

Gross Cash Flow $763,101

Liquidity Ratios

Current Ratio N/A

Quick Ratio N/A

Activity Ratios




N/A = Not Available





Seller Details

Company Name: N/A

Business Description: Insurance Adjusters

Sale Location: FL, United States Years in Business: 7

Sale Region: South Atlantic Number Employees: 3




Source Data

Broker Name: N/A

Broker Firm Name: N/A


Transaction Data

Date Sale Initiated: 8/26/2013


Days to Sell: 281

Asking Price: $2,450,000


Debt Assumed: $0


Stock or Asset Sale: Asset


Income Data



No



COGS $417,564

Gross Profit $807,929

Yearly Rent $31,008

Owner's Compensation $188,500

Other Operating Expenses N/A

Noncash Charges $0

Total Operating Expenses $609,710


Interest Expense $0

Interest Income $0

Other Expense $218,826

Other Income $0

Earnings Before Taxes ($20,607)

Tax Expense $0

Tax Benefit $0

Net Income ($20,607)

Balance Sheet Data

Balance Sheet Date N/A

Cash Equivalents N/A

Trade Receivables N/A

Inventory N/A

Other Current Assets N/A

Total Current Assets N/A

Fixed Assets N/A

Real Estate N/A

Intangibles N/A

Other Noncurrent Assets N/A

Total Assets N/A

Current Liabilities N/A

Long-term Liabilities N/A

Total Liabilities N/A

Stockholder's Equity N/A


PPA Date 6/3/2014

Cash Equivalents $0


Inventory $0




Real Estate $0


Customer Related N/A

Backlog N/A

Developed Technology N/A

In-Process R & D N/A

Tradenames/marks N/A

Non-Compete N/A

Other Intangibles $200,000

Total $200,000

Goodwill $1,750,000












Noncompete Value: N/A


Was there an Employment/Consulting Agreement? Yes


Assumed Lease (Months): 1

Terms of Lease: available

Noncompete Agreement: 500 miles radius





Employment/Consulting Agreement: Employment/Consulting agreement included transition training of 4 months.

Additional Notes: Transaction submitted by a member of the Business Brokers of Florida, BBF. This business was sold in Broward county.

Valuation Multiples

MVIC/Net Sales 1.60


MVIC/EBITDA 9.89

MVIC/EBIT 9.89

MVIC/Discretionary Earnings 5.07


N/A

Profitability Ratios

Net Profit Margin -0.02



Return on Assets -0.01

Return on Equity N/A

Leverage Ratios

Fixed Charge Coverage N/A

Long-Term Debt toAssets

N/A

Long-Term Debt toEquity

N/A

Earnings

EBITDA $198,219

Discretionary Earnings $386,719

Gross Cash Flow ($20,607)

Liquidity Ratios

Current Ratio N/A

Quick Ratio N/A

Activity Ratios




N/A = Not Available



Tax Returns Section 05


Financial Statements Section 06


The Vant Group Overview Section 07


TVG Business Valuation Preliminary Questionnaire

The below is a list of preliminary questions needed for The Vant Group to provide a Business Valuation. Please provide answers with as much details as you can. Thank you.

1. What’s the main purpose of this business valuation?

________________________________________________

2. Company Name

____________________________________________________________________________

3. Legal Structure: C-Corp_________ Sub-S _________ LLC ________ LLP ________ Sole

Prop________

4. Accounting Method: Accrual Basis or Cash Basis?

_________________________________________________

5. What year was the business started?

_____________________________________________________________

6. What is the main activity of the company?

________________________________________________________

7. Does the company have a website? ____If so, what’s the web address?

__________________________________

8. What is the projected total revenue of 2016?

______________________________________________________

9. Is this a seasonal/cyclical business? ______ If yes, please explain

______________________________________

10. Is there management in place? ______If yes, please describe each manager’s duties and responsibilities

and how many years he/she has been working for this company.

___________________________________________________________________________________

___________________________________________________________________________________

________________

11. How many full-time/part-time/temporary employees does the company have? FT_____ PT______

Temp______

12. Is the owner actively involved in the day-to-day business operation? ______If yes, please describe

owner’s duties and responsibilities:

___________________________________________________________________________


___________________________________________________________________________________

________

13. If the owner left the company, are any current employees or managers able to fulfill the owner’s job

duties without hiring a new employee? ______If not, how much will cost the new company to hire

someone to replace the owner?

__________________________________________________________________________________

14. Is owner getting paid with fair market value of salary? If not, please provide the salary information for

someone who has same duties and responsibilities as

owners_________________________________________________

15. Does the owner’s spouse working for the company? ___ If yes, how much is the salary?

____________________

16. Is it a fair market value of salary? If not, what is the fair market value of salary? ________________

17. If the owner’s spouse receives benefits (e.g. health/life insurance) from the company while not working

there, please explain:

_______________________________________________________________________________

___________________________________________________________________________________

________

18. Does the owner have any family members working for the company? ________

19. If yes, how much is the salary? ____________

20. Is it a fair market value of salary? If not, what is the fair market value of salary?

_________________________

21. If the family members receive benefits (e.g. IRA, health/life insurance) from the company while not

working there, please

explain___________________________________________________________________________

22. If the owner is considering selling the business, why so?

______________________________________________ Will owner stay on with business? _______ If

yes, how long? _________________________________________

23. Has company ever been for sale before?

__________________________________________________________

24. Does the business owner owns the business facility and the company pays rent to the owner? ______ If

yes, how much is the monthly payment? _____Is this a fair market value (FMV)?_____ If not, please

explain ___________


25. Does the company rent the business facility from a third party? ______ If yes, how much is the monthly

payment? _____Is this a fair market value (FMV)?_____ If not, what’s the

FMV_______________________

26. Do you have any contracts with existing clients? If so, how long are they on average?

______________________

27. What is the fair market value of all business assets (FF&E)?

__________________________________________

28. What are the working capital requirements (if any)?

_________________________________________________

29. Do you have any partners? ______If yes, how much shares does each partner own?

________________________

30. Does anyone clients represent more than 20% of revenue? If so, how many clients and with what

percentage of revenue? ___________________________________________________

31. Do you have contracts with these large customers? _____ If yes, how long?:

____________________________

32. Top 5 Strengths:

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

________________________________

33. Top 5 Weaknesses:

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

________________________________


Owner’s addbacks. Any non-cash expenses and personal expenses/perks running through the business will be added back. Please note, all perks must be expensed from the Income Statement and cannot exceed the figure on the Income Statement/Tax Return. Also, I want to clarify the terminology “One-time expenses”. It’s also called “Non-recurring expenses”. These expenses are not expected to occur regularly in the business, like write-offs of bad debt. Based on you answers above, please fill out the below table accordingly.

2016 (Jan –

XXX) 2015 2014 2013

Owner Salary

Owner Replacement Salary

Owner Spouse Salary

Owner Spouse Replacement Salary

Owner Other Family Member Salary

Owner Other Family Member Replacement Salary

Owner's Auto Payments (lease payments only)

Owner's Auto Insurance

Owner's Auto Maintenance (Car gas, repairs, etc.)

Owner's Cell Phone

Owner's Travel

Owner's Meals & Entertainment (50%)

Owner's Health Insurance

Owner's Spouse Health Insurance

Owner's Life Insurance

Owner's Spouse Life Insurance

Owner's Pension/ Profit Sharing

Charitable Contributions

Rent Adjustment

One-time/non-recurring Expenses (Lawsuit, relocation, etc.)

Bad Debt (Only one-time occurrence)

Owner’s Dues and Subscription (Country club membership, etc.)

34. Please provide any information that you believe are important for us to value your business.


The Vant Group Questionnaire Section 07


Business Description

About The Vant Group

Experienced M&A firm since 1999 Specialize in transactions for

businesses with revenues up to $50 Million

Focused on the Southwest U.S. with a national footprint

Motivated staff of MBAs and prior business owners

Authority on Business Transfer having authored two books: EXIT and ENTRANCE

Innovative Five-Point Advantage

Our Values

Go Above and Beyond in All

We Do

Build Lasting Relationships

Put Our Client’s

Interests First

Trust Must Be Earned

Continually Educate

Ourselves & Our Clients

Honesty is the Best Policy

Promote a Team

Environment

The Vant Group’s Mission

“When it comes to buying or selling a business, you can depend on the first-hand experience of The Vant Group—gained through buying and selling businesses for our own portfolio for the last 20 years. This experience coupled with 500+ business transactions provides the knowledge to assist you in every aspect of the business transfer process to obtain the outcome your desire.”


Selected Transaction Experience


Selected Industries Represented

Professional Services

Consumer Services

Manufacturing

Wholesale / Distribution

Construction

Commercial Landscape CPA Firm Medical Billing Environmental ConsultingJanitorial Services Website Hosting IT Services Civil Engineering Design

Call Center Carpet Cleaning Commercial Printer HVAC ServicePest Control Therapy Practice Glass Cleaning Auto Services

Custom Door Custom Glass Electronics Aircraft Parts & SuppliesPallet Plastics Products Tubular Products Commercial Sign

Building Supply HVACR Wholesaler Janitorial Supply Promotional ProductsScrap Metal Specialty Oxygen Water Filtration Wholesale Electrical

Concrete Foundation Niche Construction Pool Construction Stone & Masonry SupplyLathe & Plaster Commercial Concrete Fire Sprinkler General Contractor


The Five Point Advantage

Seller Representation

Buyer Representation Valuation Reports Advisory Services Debt Funding

“We’ve sold 80% of our listings vs. the industry

average of 38%”

“Our Buyer Representation goes

well beyond merely deal origination”

“Our clients obtain 97% of their appraised price because our business

valuations are built on experience”

“Is your business ready to be sold at the

maximum value?”

“Growth depends on capital”

Traditional Sale: Synergistic Corporate Buyer or Individual Buyer; financing terms vary

Corporate Buyer: Increase the revenue and value of an existing business through acquisition

Opinion of Value: Basic report to gauge value

Business Health Assessment: Is a business ready to be sold at maximum value?;Implement TVG Advantage ifnecessary

Buying a Business: Up to 10%+ down payment, 10-year term, 6% interest rate

Facilitation Sale: Buyer is identified by the seller and requires business transfer expertise

Individual Buyer: Live the American Dreamby becoming a business owner

Full Business Valuation: Detailed report for exit planning, funding needs, and legal proceedings

Revenue Growth and Cost-Reduction Services: Ultimately increasing bottom-line profit

Starting a Business: Up to 30% down payment, 10-year term, 6% interest rate

Employee Buyout: Up to 10% down payment, 0%-10% owner financing, 80%-90% bank financing

Accredited Business Valuation:Specialty case valuation for certain non-standard purposes

Employee & Operational Effectiveness: Having all employees moving in the same direction

Working / Expansion Capital: Terms based on profitability, accounts receivable, and projected revenue

Partner Buyout: Up to 10% down payment, 90%-100% bank financing

Project-Based & Monthly Consulting: Guidance along the way to implement impactful strategies

Owner-Occupied Real Estate: Up to 10% down payment, 25-year amortization, 4%+ interest rate


The Vant Group Difference

Experienced in the Art of Business Transfer

TVG Longevity and high number of closed transactions

Entrepreneurial Mindset

Buying and selling for our own portfolio for over 20 years

Proactive Approach

Anticipating and eliminating “deal killers” before they happen

Proven Methodology

Systematic approach throughout the entire process

Relationship Driven

Extensive relationships with buyers, bankers, and professional service providers

tvg business valuation - the vant group · 2018-07-14 · tvg’s valuation methodologies, used to...

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