| SEACAP experienced professionals provide business valuations
that are well grounded and in-step with current appraisal methodology
and trends. The SEACAP approach carefully blends traditional valuation theory with market-based
experiences in business purchase and sale transactions to produce
practical, real world appraisal conclusions.
Businesses appraisals are performed for a variety of reasons including:
- Purchase or sale event,
- Shareholder exit planning,
- Estate and gift planning,
- Buy-sell agreements,
- Recapitalization,
- Partnership formation and dissolution,
- Fairness opinions,
- Litigation support, and
- Employee stock ownership plans.
The SEACAP process for performing a business valuation is straightforward
and client-friendly. An engagement agreement defines the purpose
and scope of the assignment. It also sets a firm price and timetable
for the project. Following an exchange of information, site visit
and a series of interviews, the subject company undergoes an intense
analysis by SEACAP. At the conclusion of the engagement, the methodology,
findings, and opinion of value are incorporated into a final report
for our client.
The standard of value most commonly used to appraise a business
is Fair Market Value. The term “fair market value”
is defined in I.R.S. Revenue Ruling 59-60 as “…the
price at which the property would change hands between a willing
buyer and a willing seller when the former is not under any compulsion
to buy and the latter is not under any compulsion to sell, and
both parties having reasonable knowledge of the relevant facts.”
A subject company’s value is ultimately determined by using multiple
appraisal methods, which are taken from three basic valuation
approaches:
- The Asset Approach -Involves a value analysis
of the tangible and intangible assets and liabilities, so as
to determine a company’s adjusted net worth.
- The Market Approach - Focuses on the development
of valuation ratios through an analysis of purchase-and-sale
transactions involving other comparable (similar and relevant)
companies, and the application of those ratios to a subject
company’s revenues, earnings and/or asset values.
- The Income Approach - Produces an estimate
of a company’s value through analyses that compare the
subject’s earning capacity to the monetary return available
on other investments. Methods involve a capitalization of the
subject company’s earnings stream, or a discounting of
projected future earnings to present value.
The computations derived from multiple appraisal methods lead SEACAP to a reconciled
value (or value range) for a subject company.
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