Transforming good businesses into great companies.

Private Equity Financing

The valuation of a business is an art and not a science and like all art, beauty is in the eye of the beholder.

The purpose of a valuation is to determine the value of a business as part of its sale or purchase. A business is only worth what a buyer will pay and what a seller will accept for it.

We generally value businesses based on five categories – Industry Risk, Business Factors, Management, Financial, and Deal Breakers.

Industry Risk – geographical, economic, political, and demographic risks and opportunities play an important role in determining the viability and value of a business.

Business Factors – we consider a business’s growth potential, the strengths and weaknesses of its product or service offerings, the diversification of the revenue stream, the customer base, production capacity, and the ethics of the business model.

Management – whether the existing management will be retained or replaced is determined by their level of expertise, how they fit in with our business culture, their past successes, and their future goals.

Financial Performance – in order to be successful, a business acquisition must generate a profit over the long term. When we consider purchasing a business, we look at the potential for growth and who the potential buyers will be 10 or 20 years down the road. Ultimately, the value of the business is a combination of the ongoing profitability and the price when it is sold. To the greatest degree possible, we try to understand our options from the very beginning.

Desired Deal Outcomes – We look for partnerships that offer an Internal Rate of Return greater than 20%, a flexible and achievable 5 year plan, and more than 50% control of the business.

Empresario Scorecard – We have no secrets and we tell you how we view your business.

 
 
 
 
 
 
 
 
 
 

Industry Risk – geographical, economic, political, and demographic risks and opportunities play an important role in determining the viability and value of a business.

Business Factors – we consider a business’s growth potential, the strengths and weaknesses of its product or service offerings, the diversification of the revenue stream, the customer base, production capacity, and the ethics of the business model.

Management – whether the existing management will be retained or replaced is determined by their level of expertise, how they fit in with our business culture, their past successes, and their future goals.

Financial Performance – in order to be successful, a business acquisition must generate a profit over the long term. When we consider purchasing a business, we look at the potential for growth and who the potential buyers will be 10 or 20 years down the road. Ultimately, the value of the business is a combination of the ongoing profitability and the price when it is sold. To the greatest degree possible, we try to understand our options from the very beginning.

Desired Deal Outcomes – We look for partnerships that offer an Internal Rate of Return greater than 20%, a flexible and achievable 5 year plan, and more than 50% control of the business.

Empresario Scorecard – We have no secrets and we tell you how we view your business.