1. Valuation Program USMSS Richard Flom, CPA/ABV/CFF, CVA

2. What is your company worth? Value depends on a number of different things: 1.Buyer 2.Industry 3.Profitability 4.Cash Flow 5.Assets A valuation is based on the future outlook of the business.

3. Buyer Who would purchase your business? ▫Individual ▫Strategic buyer  Generally pay more

4. Industry What industry is your company in? ▫Is the industry currently in great demand? ▫What effect does the economy have on your business? (Gov’t contracts with cutbacks in effect) USMSS members generally provide sales, network, repair, and rental services.

5. Profitability and Cash Flow Is your business profitable? Does it have positive cash flow?

6. Assets Does your company have assets that are undervalued on the books?

7. Values Fair Market Value: “The amount 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 seller is not under compulsion to sell, both parties having reasonable knowledge of relevant facts.”

8. Values cont’d Fair Value ▫Based on state law Investment Value ▫Business’s worth to that particular buyer Intrinsic Value ▫Value in the eye of the investor

9. Types of Valuations A Conclusion of Value (An Opinion) A Calculated Value An Oral Report

10. Valuation Approaches 1.Market Approach ▫Guideline company method ▫Transaction method ▫Industry Method – Rules of Thumb

11. Valuation Approaches 2.Asset Based Approach ▫Adjusted book value method ▫Liquidation value method ▫Cost to Create Method

12. Valuation Approaches 3.Income Approach ▫Capitalization ▫Discounting

13. Discounts ▫Marketability ▫Minority ▫Small Company discount (size related) ▫Key Person discount Premiums ▫Control premium

14. What should a valuation cost?