Valuation

Valuation is both an art and a science. Uncover how to balance valuation methodologies with strategic objectives.

Whether due to merger, expansion, or investment, an understanding of the processes and techniques of valuation is crucial for the effective growth and solid financial performance of credit unions. Capstone Managing Director John Dearing and Manager Anna Kochkina break down the multifaceted valuation process in CUInsight. https://www.cuinsight.com/credit-unions-valuation-and-ma-transactions.html

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With the rising number of credit union mergers, the increasing interest in acquisitions of community banks and branches, as well as investments in fintechs by credit unions and CUSOs, understanding valuation – processes and techniques – has become increasingly crucial for successful growth and solid financial performance. Valuation Process Steps Highlighted below are some of […]

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In my last 30 years of helping companies grow, one of the most common questions I have come across is “how much is my company worth?”. Bringing together the financial (valuation) and non-financial (evaluation) pieces of the puzzle will help you determine the value of a company. Valuation refers to the economic value you place […]

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Capstone’s John Dearing recently spoke to Mike Lawson of CUbroadcast at the 2018 NACUSO Network Conference. The interview covers key points from John’s breakout session with Guy Messick “What Is Your CUSO Worth? Valuation for CUSOs and Marketplace Trends.” In case you missed the live interview, you can watch the recording on the CUbroadcast website. In this […]

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The short answer to this question is no. Some owners may sell to the highest bidder, but this is not always the case. Differentiating by price alone is problematic for a number of reasons, the most obvious being that someone can always outbid you. In addition, when it comes to privately-held transactions, especially, we find […]

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Are you planning to sell or buy ownership units in a CUSO? Are you making an initial offering for a new CUSO? Are you an existing company that intends to become a CUSO by selling ownership units? Will your CUSO buy a business or merge with another CUSO? If any of these situations applies to […]

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Valuation multiples in the middle market are “unprecedented” due to low interest rates, relatively cheap debt available in today’s market, and high amounts of dry powder chasing the same deals. According to GF Data, average valuations reached 7.4 times, the highest quarterly mark the data base has recorded in 15 years. With such high valuations, […]

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Obtaining audited financial statements is always best when valuing an acquisition prospect. An audit enhances your confidence and ensures what management has presented is a “true and fair” view of the company’s financial performance and position. We run into plenty of privately-held, middle market companies that don’t have audited financial statements. Many have their financial […]

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The Guideline Public Company (GPC) Method is one of the more popular valuation methodologies because people often hear about it in the news or in presentations. This method identifies prices for individual shares of publicly traded companies that are subject to the same industry dynamics as the subject company (the company you are trying to […]

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In 2015, record valuations drove a boom in mergers and acquisitions activity, leaving many to wonder when the deal bubble would burst. In 2015, US buyout firms paid an average of 10.3 times EBITDA compared with the previous record of an average 9.7 times multiple in 2007. Despite hitting a peak, valuations are still expected […]

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As you might expect, sellers look for a premium multiple. Buyers typically will only consider paying a premium to market if they are adequately convinced that the value of the potential target justifies it. This begs the question: How does one derive a rationale for discount and premium multiples on a business? There are a […]

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Time your negotiations by understanding owner psychology. Everyone wants to talk about price in mergers and acquisitions. It’s often the number one focus of buyers and sellers…but for opposite reasons. Both are likely to say they are looking for a “good deal,” but this can have a completely different meaning depending on the perspective. Buyers […]

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I’m frequently asked about the “right” price to put in the letter of intent. As you will know, the LOI is an important milestone in the M&A process, because it establishes a “gentleman’s agreement” before the formal deal is settled.  You have yet to compete due diligence at this stage, and figuring out the right […]

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How often do sellers have unrealistic expectations of their company’s value? What’s the best way for a buyer to approach them early in the process and address their concerns? Todd Nelson, Capstone Valuation Advisor, answers: This is a common issue where sellers hold high value expectations for their businesses. While price is not the only […]

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Last quarter, we predicted there would be a wave of deals in the private equity sector in the coming months. While we may not have seen a “wave” of transactions, deal volume has slowly, but steadily increased in 2013, according to GF Data. While the number of PE deals has not reached a 4Q 2012 […]

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According to Business Valuation Resources, new analysis shows time needed to market and sell a privately held business is 211 days, up from 200 days in previous analysis. Todd Nelson, Capstone Valuation Advisor, weighs in on these observations: “There are many variables that impact the time it takes to complete a private company sale. Those […]

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by John Dearing, Capstone Managing Director GF Data recently published a report noting private equity deals valued between $10 and 250 million averaged 6.4x – the highest levels in three quarters.  This data is an interesting indicator of the M&A market. Although multiples are up, deal volumes remain sluggish for private equity as a whole.  […]

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* Guest post by John Dearing, Capstone Managing Director Just last week during a valuation discussion, I noted to the Board to be wary of EBITDA multiple discussions in the world of M&A. As an article from PE Hub points out, when you ask five different professionals to calculate a company’s EBITDA, you’ll come up with […]

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Valuation is a key component of the acquisition process that is widely misunderstood, because people tend to adopt a narrow financial perspective. Valuation should be anchored in your strategic rationale for buying another company in the first place. It all comes back to your business strategy and the synergies that will be created by the […]

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Are you considering an acquisition? Remember, when it comes to buying companies, especially privately held ones, the transaction is almost never about just the price. There is always something going on that falls outside the spreadsheets. Understanding that mysterious ‘‘something’’ is what can make or break your deal. The statistics are frightening. By most reckonings, […]

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