Provamark Webinar Valuation- CPAs · Business Financial Analysis Platform Financial Ratio Analysis...
Transcript of Provamark Webinar Valuation- CPAs · Business Financial Analysis Platform Financial Ratio Analysis...
WHAT IS PROVAMARK?
Business Financial Analysis Platform
Financial Ratio Analysis
Financial Projections
Business Advisors:Consult multiple companies on all stages of financial analysis and due-diligence
BenchmarkingScoring
Business Valuation
Due Diligence
Spreading Financials Automatic calculation of key financial measures:Cash Flow, EBITDA, SDE
Easy, Quick setup of Projection ScenariosModel debtCompare multiple scenarios
Create, manage, fulfill and share:Document ListsQuestionnaires
4 Valuation MethodsValuation Range
CPA AND VALUATION?Valuation starts with accounting statementsValuation useless without accurate accounting
Expand Consulting Relationship
WHY VALUATIONBusiness Sale or Merger
Shareholder/Partnership DisputesMatrimonial Disputes
Estate Planning
Business ReorganizationBusiness Interruption ClaimsEmployee Stock Plans
Business Financing
Strategic Planning
VALUATION METHODS
Market Approach
Cost Approach
Discounted Cash Flows
Market Multiples
Balance Sheet
DCF
Dividend Discount
AvailableOn ProvamarkMethod
MULTIPLES
Financial Base
MultipleLow - High
Business ValueLow - High
=
Multiples approach
Select appropriate base measure for industry
Select appropriate valuation multiple rangeDetermine if business deserves multiple range above or below industry
ASSET VALUATIONFixed Assets and Equipment
Liquid and Current AssetsPayout value
Collection probability for receivables
Sale conversion probability for inventories
Replacement valueAppraisal value, depreciated book value, auction/liquidation value
DCF VALUATION?Value of a business today is the value of all the future cash the business will generate.
= + + …Cash Flow
Year 1Cash Flow
Year 2
DIVIDEND DISCOUNTMODEL
Assume business pays cash flows out as dividends into infinite future.
+ + …Dividend
Year 1Dividend
Year 2Dividend
Year 3
=Value today of all the future dividend payments
PROJECTED CASH FLOWSMODEL
+ProjectedCash Flow
Year 1
= Value today ofprojected cash flows + terminal value
TerminalValue
ProjectedCash Flow
Year 2
ProjectedCash Flow
Year 3
+ProjectedCash Flow
Year 4
+ProjectedCash Flow
Year 5
+ +
Project expected business cash flows for reasonable period 3-5-10 years.
Value all cash flows after projection period together - Terminal Value.
CASH FLOWS
Measures and Proxies
Revenues, Net Income
EBITDA/EBIT
Free Cash Flow: Levered/Unlevered
Seller’s Discretionary Earnings
SMALL BUSINESSESPrivate often family owned
Owner/Family operated
Owner/Family expenses mixed with business expenses
Seller’s Discretionary Earnings (SDE)
SELLER’S DISCRETIONARY EARNINGS
Seller’s Discretionary
Earnings
Pretax and pre-interest profits before non-cash expenses(EBITDA)
Non-recurring/Extraordinary Expenses
Expenses/Income not related to business
HOW CAN PROVAMARK HELP?
Old way:
Complex Excel models
Valuation software for valuation experts
Expensive, static, printed reports
HOW CAN PROVAMARK HELP?
Online, Easy Setup, Easy to Follow
Work with multiple clients and stakeholders
Supporting Services
Automatic Spreading of FinancialsFinancial Ratio Benchmarking and Scoring
Financial Projections