Complete Business Valuations
Available in 9 Days or Less!
In a recent divorce court judgment where Stewart
appeared as an expert witness, the presiding judge ruled:
“As to the value of XXX Printing, I found Mr. Stewart’s testimony (as an expert witness) to be most compelling regarding the value of the business.” Stewart’s valuation of the business in question? $575,000. Judge’s final award: $600,000!
Some Kind Words from One of
My many Valuation Clients…
Received the following from a former client, and I thought
you would be interested in his comments:
“I had used John Stewart’s consulting services several times throughout the last 15 years, and he has been extremely helpful in helping me manage and grow my printing company. I went through a horrible divorce last year and hired John to do my valuation and to testify at my divorce trial. John’s valuation was used by the court, despite the fact that there were two other valuations that were presented by a realtor and a business broker.
“In fact, the judge said that John’s testimony about the nature and value of my printing company was very compelling and that he (Stewart) was the best witness I presented for the entire trial. This saved me almost a half million dollars in my divorce settlement as the other lawyers presented values that were twice what the business was actually worth.
“The process John used for the valuation was straight forward mathematically and made common sense. We can talk about rules of thumb and the economy but the basics of finding what your business is worth lies in the actual numbers, and John’s knowledge of the printing business allows him to ask the questions necessary to get down to the real earning potential and value of a printing company.
“I recommend his book on selling a printing company (www.printshopsforsale.net) as a good read to prepare you for doing a good job with him in finding the fair market value of what your company is really worth.”
Tony Meyer, Owner, Xpress Printing, Sisters, OR
The Process of Business Valuations
“In the end, a business is worth nothing more and nothing less
that what a qualified buyer is willing to offer and what
a motivated seller is willing to accept.”
With the current state of the economy being what it is, there are actually more opportunities to buy or sell a printing business at a “fair market price” than ever before, but you must be willing to accept the fact that the suggested fair market price or value of your business may be far different than what your brother-in-law, banker or accountant might have told you in the past.
One of the biggest problems I encounter when it comes to valuations, especially those prepared for sellers, is that they wait far too long to approach someone like myself or others to obtain a valuation on their business. Valuations need to be prepared as far as in advance as possible. You cannot wait until the last moment to get a valuation of your business, only to discover that had you made a few changes or approached the situation differently it would be worth far more than what we calculate. Considering the fact that many businesses are valued at $300,000 to more than $1 million, our fees are very reasonable.
From the buyer’s perspective, it is important to note that a fundamental valuation principle requires that the business being considered for purchase has the ability to produce a steady income stream sufficient for the buyer to withdraw at least a “fair market” salary for his efforts as well as enough additional cash to purchase the business. Generally speaking, a business must be able to “buy itself” for it to be a good investment vehicle. Consequently, a buyer should be examining key financial ratios, the current equipment mix, cash flow, customer mix and potential reductions in labor and overhead costs as various methods for funding this purchase.
From the seller’s standpoint, he or she is interested in getting the highest price possible for the business with the least risks possible. Sellers, having owned and operated their businesses for many, many years, often tend to place an unrealistically high value on their business, and this is to be expected but it is also a major problem for many sellers – their unwillingness to be realistic when it comes to valuing their business.
Unfortunately, because owners do not have anything other than a “gut” feeling about the worth of their business, the disparity between what a buyer might be willing to offer and what a seller is expecting is often much greater than it should be. That’s where we can help. We can help both buyers and sellers narrow the gap between the asking price and the selling price and thus improve the the chances for a successful sale.
My valuation services are designed to assist both buyers and sellers, either individually or collectively, in providing them with an independent, 3rd party “fair market” valuation of the business in question. The methods used in our valuation process are based on the “Excess Earnings” method as described in a book titled, “Print Shop for Sale,” authored by myself and well-known industry consultant Larry Hunt. You can read more about this book here.
It is important to understand that while there is no “perfect” price for a business, there is a “fair market price.” This price may not be the initial asking price nor the initial offering price, but it is a price based upon sound valuation principles, and if the parties in question can agree that the process and principles are indeed fair and logical, then the rest of the acquisition process can proceed quickly.
Information Required – My valuation process relies heavily on two year’s worth of financial data and uses widely accepted formulas for determining the value of a printing business. I also use a 14-item questionnaire to more accurately determine an excess earnings multiplier or capitalization rate. Below are two PDF documents listing the specific items I need as well as our key valuation questionnaire:
Please note that we do not accept electronic files. Instead, we request that all the required information, forms and financial statements be supplied as hard copies and be mailed to our main office address. Also, we prefer to receive all requested information at one time, rather than being supplied to us in bits and pieces. Thank you.
What does the client receive? – The client receives a 8-10 page Excel Spreadsheet that includes totally recast income and expense worksheets, a valuation criteria worksheet, as well as a written narrative report outlining the approach we used and our estimated value of the business.
How long does it take – Valuations, once all the material is received, are typically prepared in 7-10 days or less! However, in an emergency, we can produce a valuation report in 72 hours or less in situations where sellers or buyers find themselves in dire situations requiring immediate action. Generally speaking, we do not charge extra for this “rush” service, assuming we can meet our obligations to other clients.
Important Note: Please do not send electronic files. We require that financial statements, balance sheets and other requested data be supplied as hard copies and mailed to our office. We will not accept or work with electronic files of a financial nature.
Our Standard Valuation Fee – $1,800
How much does it cost – Our standard fee for this service is $1,800 and applies to most business valuations. Higher fees ($2,500 to $5,000) may apply in situations involving complex partnerships, property settlements, partnership dissolutions, divorces, etc. Call for further information.
How are payments handled? Once you commit to hire us, we will send you an invoice via Paypal for the agreed upon amount. You can remit our fee via your PayPal account, OR you can use PayPal to process payment via a specific credit card (MasterCard, VISA, AMEX) you choose to use. If you choose to pay by check, please make check out to John C. Stewart.
We look forward to assisting you – Don’t hesitate to give us a call at 321-727-2444. We don’t bite <g> and we will be glad to answer any questions you might have. And don’t worry, we’re not going to try and convince you that you need a valuation or even that we are the best. You will have to make that decision on your own. Have a great day.
P.S. For some interesting facts and figures on company valuations we invite you to visit our “sister” site at www.printingresearch.org where there are numerous articles on the front page that deal with company valuations and various factors that apply to the values we assign to firms. We think you will find the article(s) quite interesting.