Valuations

Recently, I was called to help a small business with about 25 employees ready itself for sale.  The small business had no employees on staff or consultants looking at the future.  During this tough economics crisis the cards came falling down.  In a matter of days they had laid off 19 hard working employees and the owners had decided to sell the company for whatever they could get.

Capital Cents was called in to help the owners of the company create a valuation and form a strategy to present their case to potential buyers for either the whole company or pieces of it.  After sitting down with the owners we came to the conclusion that they had three divisions that they could sell.

  1. Future Maintenance Fees
  2. A new product which was about 75% complete
  3. Other Assets

The owners and Capital Cents reviewed the yearly inflow of revenue from the maintenance fees and took into account any costs associated with keeping the customer happy.  After that we created a present value of those cash inflows by estimating a rate of return.  Going through this exercise gave the owners the opportunity and insight into not only their own business but also allowed them the unique perspective of viewing it from a buyers perspective.  It was a real eye opener for them because for the first time they were seeing a number to value what those future cash inflows were worth today.

Stay tuned to follow our process through valuing the new product and other assets.

Our first example of what Capital Cents can do for you and your company.

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