Methodology

ValuCorp has a proven methodology that is based on decades of experience and drawn from a multitude of useful valuation models used in many industries for various size companies. Our Business Valuations are simple yet effective: while every business, and its owners, has unique attributes that differentiate it, every business has certain common factors. We take those factors, plus elements that create a premium or a discount, into consideration, without getting bogged down in esoteric theories that are not necessities to creating a valuation opinion. And we turn the information around quickly, at a very affordable price. We do this with a straight forward Confidential Valuation Planner that integrates with our Business Valuation Report - capturing all the key value drivers, which we believe is crucial in order to achieve a realistic determination of value.

For example, if you are interested in selling your family business, we initially send you the Confidential Portfolio Planner, tailored to you, the business owner. You probably can complete it without incurring extra legal or accounting fees. While you're completing it, or after it's done, you are entitled to 2 hours of consulting. When we receive your Planner, we confirm to you that it is sufficiently complete for us to proceed. After that, we do a survey of your industry that covers recent sales, acquisitions, startups, overall profitability, foreign competition, and the health of the marketplace - is it growing, mature, or in decline? And in 2 weeks, you will have your Business Valuation Report.

Fair Market Value will be determined for your entire company or a percentage interest, as of the date you select, for any one of a number of uses. Fair Market Value is defined as the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. We will determine the Fair Market Value of the Company assuming its existence as an ongoing business. This premise of value is usually only applicable for the stated purpose, and the results should not be used for any other purpose.

Valuation Methodology

Three general approaches are used in analyzing the value of your business. These three approaches are inter-related and are often referred to as the income, market and asset-based approaches. Each of these general approaches is comprised of numerous variations, or methods. The selection of a given approach is based on the facts and circumstances of your company, and the availability of required information. We will ascertain value using a combination of certain approaches, methods, or variations of same.

1. In the Market Approach, the value of a business is estimated by comparing your company to similar businesses whose ownership interests are actively traded in public markets or which have been recently sold. Also included in this category are indications of value derived from transactions of entire companies, transactions in the shares of your company, or acquisitions made by your company. This is applied as the price per unit of a measure of financial performance or position. This equates to a multiple approach, using price-to-earnings or similar market/transaction derived factors applied against the appropriate financial measure generated by your business to indicate value.

2. The Income Approach has several variants. One of these is the Discounted Cash Flow Approach. In the discounted cash flow approach, the cash flows anticipated over several periods, plus a terminal value as of the end of that time horizon, are discounted to their present value using an appropriate rate of return. The discounted cash flow analysis and other prospective models are considered to be the most theoretically correct approaches because they explicitly evaluate the future benefits associated with owning the business. Other income approaches are based on capitalizing some measure of financial performance, such as Capitalization of Earnings or Capitalization of Dividends, using a capitalization rate commensurate with both the risk and long-term growth prospects of your company.

3. The Asset-Based Approach involves comparing the net asset book value to an estimate of the fair market value of all assets, and then subtracting the estimated fair market value of all liabilities.

Discounts and Premiums

Based on our research that will be discussed in our Report, the determination of value shall be subject to certain discounts and premiums. After a valuation amount is determined, we consider premiums and discounts. Typically, majority and minority interest deals with the relationship between the interest being valued and the total enterprise. The primary factor bearing on the value of the minority interest in relation to the value of the total entity is how much control the minority interest has over that entity. The concept of marketability deals with the liquidity of the interest, that is, how quickly and certainly it can be converted to cash at the owner's discretion. Also, combined premiums or discounts are multiplicative, and not additive, and a combined premium or discount is determined.

Our Procedure

Correspond with you by telephone, fax or email, and as appropriate, arrange to have one of our professionals visit your company.

Consider the characteristics (nature, history and outlook) of your business, including rights, privileges and conditions, quantity, factors affecting control and agreements restricting sale or transfer.

Review selected information from trade associations and other sources regarding your company's particular industry, markets and the economy.

Read your company's financial statements and tax returns with a view to recast amounts to reflect values not otherwise apparent in the historical or prospective financial statements.

Review appropriate capital markets information, such as available rates of return on alternative investments, relevant public stock transactions and applicable mergers and acquisitions.

Consider prior transactions involving your company.

Obtain available historical and prospective information from you.

Valuation Conclusion

Based on our analysis we will determine the Fair Market Value.