This is page is not a replacement for formal research.

Call The LSC Group LLC at (813) 254-2500 for further consultation or clarification.

Enterprise Valuation

Overview: Valuation services are critical to those who rely on the value of a business to make informed decisions. An enterprise valuation is an independent assessment of value which is often necessary in connection with a merger, an acquisition, estate and gift planning, succession planning or a buy-sell agreement. A qualitative analysis of the business, general economic conditions and the industry must be combined with quantitative measurements to determine the worth of a business or business interest. Each business is unique and has different factors which contribute to its value so a detailed analysis of all relevant factors is necessary to reach a reliable conclusion.

There are two types of engagements to estimate value of a business—a valuation engagement or a calculation engagement. A valuation engagement requires more procedures than a calculation engagement and considers multiple valuation approaches such as :

  • Income-based approach
  • Asset-based approach
  • Market-based approach

A calculation engagement involves calculating the value of the enterprise using approaches and methods that management has agreed to and does not include all of the procedures performed in a valuation engagement.

The selection of the most appropriate valuation engagement type is largely dependent upon the purpose of the valuation, the characteristics of the subject company, and the availability of reliable information requisite to the various methods.

Services: We perform valuations of closely-held businesses in a variety of industries. We offer professionals who are credentialed to perform valuation services to provide you with an objective analysis to assist you in management decisions. We have chosen the Certified Valuation Analysts (CVA) certification, sponsored by the National Association of Certified Valuation Analysts (NACVA) for our professional certification. We work closely with management to gather and evaluate all necessary information which may include historical and projected financial information as well as non-financial information related to the industry and market conditions.
Depending on your needs, we will perform either:

  • A valuation engagement which results in a conclusion of value.
  • A calculation engagement which results in a calculation of value.

We apply the guidance of Statements on Standards for Valuation Services No. 1, published by the AICPA and the NACVA Professional Standards when performing our procedures and issuing our report.

Case Study: Valuation of a Company for purposes of gifting shares of Company stock

We estimated the fair market value of shares of a privately held construction company’s stock in order to determine the value of shares of stock that would be gifted to the owner’s son. We analyzed the company’s risks by reviewing its past financial history, performing ratio analyses, interviewing management and analyzing the quality of management and the company based on the overall findings. We also reviewed the diversification of the company’s operations and other factors such as key-man issues and the depth of management. We considered a number of approaches to the valuation and we determined that the Capitalization of Earnings method (an income-based approach) was the most appropriate method for valuing the company and the related share value.

White Paper summaries are not a replacement for formal research into a specific topic or application of accounting principles and interpretations to specific facts and circumstances. Please consult with your independent auditors or call The LSC Group LLC, 3405 West Fletcher Avenue, Tampa, Florida 33618, at (813) 254-2500 for further consultation or clarification.