Situation
The three partners of a brew pub in New Hampshire wanted to know what the business was worth. They had built the business to be a fun and comfortable place to have a pint, grab dinner, and stay for a while catching up with others and playing games. The brew pub had a loyal customer base serving the local community.
As the partners thought about future planning, they wanted to determine if they should continue to reinvest in the business or if they had built enough value to consider selling. They needed an objective business valuation to help them plan.
They did an online search for a business valuation professional and secured Lou Pereira of Merrimack Business Appraisers to value their brew pub.
Merrimack Business Appraisers’ Approach
Pereira was happy to work with the brew pub owners, applying his proven approach to valuing their brew pub business. While most business owners assume a valuation is unique for every business, these owners appreciated Merrimack Business Appraisers’ rigorous and thorough process that incorporates industry fundamentals and business fundamentals that drive value while accounting for associated risks.
The owners were great people and Pereira enjoyed preparing the business valuation of this brew pub that operated seven days a week. Sourcing of the ingredients to brew the beer was consistent with any other business that sources supplies for its business, whether a restaurant or a manufacturer.
Valuation Outcome
Pereira completed the business valuation of the New Hampshire brew pub that included the brewery, bar, and restaurant. The thorough and objective business valuation enabled the three owners to decide to continue to invest in their lifestyle business.
When Values Matter.
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Situation
A business owner in New Hampshire decided it was time to sell his business and contacted Lou Pereira, President of Merrimack Business Appraisers. He had worked with Pereira years ago when Pereira had developed a thorough business valuation to successfully settle a shareholder dispute.
The owner had engaged a business broker to bring his business to market, but was not comfortable with the valuation that the broker had provided. The simple valuation provided by the business broker was unsubstantiated and the owner was not comfortable going to market without understanding the rationale for the value determined. He contacted Lou to invest in a detailed business valuation to support why the valuation was determined and how it was determined.
Merrimack Business Appraisers’ Approach
Lou Pereira prepared a thorough and detailed business valuation of the New Hampshire business, applying his proven process to determine the valuation and to support both how and why the valuation was calculated.
Valuation Outcome
Merrimack Business Appraiser’s client was comforted and satisfied to have invested in a detailed business valuation that clearly and logically presented the rationale for the company’s valuation, a number that was valued higher than the simple valuation submitted by the business broker.
The business was successfully sold for the higher value, reinforcing the importance of understanding the numbers to maximize return on the sale.
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Situation
This manufacturing business had been in the family since its launch in the 1950s. Over generations, the family members had hired an independent management team to run the company while the remaining family members served on the board.
The majority of shareholders sought to sell the company while one family member held out, having significantly different expectations of the firm’s value.
Two trusted advisors of the company introduced Lou Pereira, President of Merrimack Business Appraisers, to prepare an objective business valuation.
Merrimack Business Appraisers’ Approach
For this situation, the calculation of business value was important to assist the family members, especially the one individual, to see how and why the business value was determined. To develop the objective and thorough business valuation, Pereira completed a site visit, interviewed the President who had been hired to run the company and completed an evaluation of all the important aspects of valuating a manufacturer including, but not limited to, its facilities, location, and customer concentration.
The valuation presented the rationale and supporting reasons for the calculated value of the business.
Valuation Outcome
Merrimack Business Appraisers’ business valuations are thoroughly prepared to stand up to scrutiny, clearly presenting the ‘how’ and ‘why’ the valuation was determined. The final business appraisal report was delivered to the family members who all agreed that the determined value was reasonable, credible, and fair. With the valuation complete, the board members all agreed to sell the business and the manufacturer was sold at the valuation price.
Situation
A consulting business owned by nine principals was being sold to a larger entity. As part of the sale, a business valuation was needed, including determining the personal goodwill of each owner to take advantage of the significant tax advantages of the goodwill allocation.
Merrimack Business Appraisers’ Approach
Given the nature of a consulting business, the calculation of personal goodwill by individual owners needed to account for many variables including, but not limited to, determining individual client involvement, allocation of time and any variations in billable rates.
Lou Pereira of Merrimack Business Appraisers developed a multivariate model to account for all the variables involved and then painstakingly completed the model for each of the nine individuals. The result calculated each owner’s personal goodwill allocation.
Valuation Outcome
The business valuation included determining the personal goodwill of each owner in the consulting business. This calculation supported the allocation of the sales price to each of the nine owners of the consulting business and provided each individual with the supporting details required to take advantage of the significant tax benefits of their goodwill allocation, reducing their tax liability.
Situation
The owner of a small medical practice wanted to retire and had discussed selling the business to an employee. As a nationally recognized expert in developing highly defensible business valuations for small and mid-sized privately held companies, Merrimack Business Appraisers President Lou Pereira was retained to determine the fair market value of the business and advise the parties on an equitable deal structure.
Merrimack Business Appraisers’ Approach
Pereira conducted a methodical and through detailed qualitative and quantitative analysis of the practice, applying an income approach and market approach. The income approach used a discounted cash flow analysis that fully explained and substantiated the value conclusion. Use of Merrimack for an independent business appraisal was important to assure all related family members of both the buyer and seller that a fair price was paid and received for the business.
Valuation Outcome
This equitable deal structure facilitated the sale of the business.
Situation
The owner of a $1.1 million service business was in negotiations to sell the business to another company in the same industry. The negotiations had stalled over the value of the business (the buyer’s CPA firm had valued the business at $800,000) and the ability to secure financing.
Merrimack Business Appraisers’ Approach
As one of the nation’s foremost authorities on valuations, Merrimack Business Appraisers President Lou Pereira was retained to determine the fair market value of the business. Pereira’s highly detailed and complete business valuation report substantiated that the business was worth $1.1 million, a full $300,000 more than the original company valuation. Pereira leveraged his proven process to complete a thorough qualitative and quantitative analysis to identify and document the primary drivers of the value of the business.
Valuation Outcome
The quality of Merrimack’s valuation substantiated the $1.1 million value and the deal closed at the appraised value, which was a significant gain for the seller. This process helped close the deal at an expedited pace, minimizing further buyer due diligence and reducing costs.
THE SELLER’S ATTORNEY MADE THE FOLLOWING COMMENT
“Your appraisal really helped close the deal! The quality and content of your appraisal virtually eliminated buyer due diligence and convinced the lender to forego SBA loan guarantees. This resulted in significantly reduced costs and an expedited closing. It’s a pleasure working with you.”
