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Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
Sample Valuation 12 Pgs
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Sample Valuation 12 Pgs

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  • 1. Valuation and Most Probable Selling Price World of Shades, Inc. April 9, 2007 Type of Ownership: C Corporation Source of Financial Information: Business Owner The PricePoint pricing report is based on information furnished by the owner(s)/officer(s) of the business under review. Neither Jacob Orosz, nor Morgan and Westfield assumes responsibility for the accuracy or completeness of the information. Buyers should seek their own tax, accounting, and legal counsel, if they need assistance in understanding the methods employed and the conclusions drawn herein. Prepared by Jacob E. Orosz
  • 2. -2- World of Shades Adjusted Income Statement For the Year Ended December 2006 Statement Adjustment Revised Income $ $ $ Gross Sales 4,782,505 0 4,782,505 Other Income 116,014 1 116,014 Total Income 4,898,519 0 4,898,519 Cost of Goods Sold 3,452,586 29,058 2 3,423,528 Gross Profit 1,445,933 29,058 1,474,991 Expenses Advertising 35,045 21,914 3 13,131 Auto 24,722 22,800 4 1,922 Bad Debt 4,914 0 4,914 Computer Service 7,082 0 7,082 Contributions 550 550 5 0 Dues & Subscriptions 2,535 2,535 6 0 Fuel 10,375 10,375 7 0 Insurance 106,200 65,508 8 40,692 Interest Expense 112,197 112,197 9 0 Licenses & Permits 2,981 0 2,981 Misc. 857 857 10 0 Office Supplies 22,660 14,860 11 7,800 Office Wages-1099 87,876 33,000 18 54,876 Payroll Expenses 249,123 0 249,123 Payroll Taxes 86,613 7,800 12 78,813 Payroll Wages-Office 202,787 78,000 13 124,787 Postage & Delivery 923 0 923 Printing & Reproduction 4,502 0 4,502 Professional Fees 8,392 0 8,392 Rent 111,096 21,914 14 89,182 Repairs & Maintenance 16,905 2,000 15 14,905 Surcharge Fees 970 0 970 Taxes 8,011 0 8,011 Telephone 1,375 1,375 16 0 Uniforms 3,345 3,345 17 0 Utilities 5,973 0 5,973 Workers Compensation 17,380 0 17,380 Total Expenses 1,135,389 736,359 Net Profit / SDE 310,544 428,088 738,632 (Before Taxes) Prepared by Jacob E. Orosz
  • 3. -3- 1 2006 Revenue booked in 2007 for tax purposes. 2 Installers no longer paid to measure, now performed by salespeople savings of $1,600. Personal construction expenses of log cabin, non business expense. 3 Golf sponsorship of friend $5000, One time lettering of trailers $914. Other - $16,000. 4 Owner's personal vehicle 5 Non-business expense. 6 Non-business expense. 7 Owner's personal vehicle expenses. 8 Dental insurance no longer covered for employees $1892. Owner's health insurance $3616. Life insurance and retirement plan a non business expense. 9 Would not accrue to new owner. 10 Non-business expense. 11 One-time purchase of showroom displays $13,300. Office supplies paid by salesmen $1,560. 12 Sales Manager's payroll taxes $4,800. Owner's payroll taxes $3,000. 13 Sales Manager's role -will accrue to owner $48,000. Owner's wages $30,000. 14 Rent reduced in new facilities by $2,790 per month. 15 Non-recurring expense. 16 Owner's personal cell phone. 17 Uniforms no longer paid for employees. Prepared by Jacob E. Orosz
  • 4. -4- World of Shades Adjusted Income Statement For the Year Ended December 2005 Statement Adjustment Revised Income $ $ $ Gross Sales 5,090,578 0 5,090,578 Other Income 0 0 0 Total Income 5,090,578 0 5,090,578 Cost of Goods Sold 3,840,899 250,470 1 3,590,429 Gross Profit 1,249,679 250,470 1,500,149 Expenses Advertising 22,055 2,510 2 19,545 Auto 36,787 35,430 3 1,357 Bad Debt 128 0 128 Computer Service 6,907 0 6,907 Contributions 1,697 1,697 4 0 Dues & Subscriptions 3,845 3,845 5 0 Fuel 4,992 4,992 6 0 Insurance 35,104 6,321 7 28,783 Licenses & Permits 2,680 0 2,680 Misc. 4,593 4,593 8 0 Office Supplies 48,993 6,112 9 42,881 Office Wages-1099 10,237 0 10,237 Payroll Expenses 163,550 0 163,550 Payroll Taxes 96,890 13,600 10 83,290 Payroll Wages-Office 258,802 136,000 11 122,802 Postage & Delivery 1,102 0 1,102 Printing & Reproduction 4,637 0 4,637 Professional Fees 9,540 0 9,540 Rent 130,674 2,510 12 97,146 Repairs & Maintenance 9,970 0 9,970 Depreciation 4,060 0 4,060 Taxes 7,069 0 7,069 Telephone 1,888 1,888 13 0 Uniforms 6,244 6,244 14 0 Utilities 4,208 0 4,208 Workers Compensation 3,042 0 3,042 Total Expenses 879,694 622,934 Net Profit / SDE 169,985 476,212 646,197 (Before Taxes) Prepared by Jacob E. Orosz
  • 5. -5- 1 $3800 - Installers no longer paid to measure, job now performed by salespeople. COGS from another unrelated business. 2 Non-Business Expense. 3 Owner's personal vehicle. 4 Non-business expense. 5 Non-business expense. 6 Owner's personal vehicle expenses. 7 Dental insurance no longer provided for employees $2705. Owner's health insurance $3616. 8 Non-business expense. 9 Office supplies paid by salesmen $6,112. 10 Sales Manager's payroll taxes $4,800. Friend's payroll taxes $2,800. Owner's payroll taxes $6,000. 11 Sales Manager duties assumed by owner $48,000. Excess wages paid to friend $28,000. Owner's salary $60,000. 12 Rent reduction in new facilities by $2,790 per month. 13 Owner's personal cell phone. 14 Uniforms no longer paid for employees. Prepared by Jacob E. Orosz
  • 6. -6- World of Shades, Inc. Key Factor Analysis Number of Years Business Has Operated: 19 Number of Years Owner Has Operated Business: 19 Owner's Required Down Payment Percentage: 50% Amount of Competition: 2.50 Growth of Las Vegas: 3.60 Number of buyers in the market.: 3.50 Industry Trend: 2.60 Location & Facilities: 2.80 Marketability: 3.10 Historical Profit Trend: 2.70 Ease of Replication: 2.60 Amount of Risk: 2.80 Key Factor Multiplier: 2.82 Prepared by Jacob E. Orosz
  • 7. -7- World of Shades, Inc. Adjusted Income Summary 2005 2006 Average Total Income $5,090,578 $4,898,519 $4,994,548 Cost of Goods $3,840,899 $3,435,142 $3,638,020 Gross Profit $1,269,131 $1,463,377 $1,366,254 Total Expenses $622,934 $724,745 $673,840 SDE $646,197 $738,632 $692,414 Prepared by Jacob E. Orosz
  • 8. -8- World of Shades Asking Price 2005 2006 Simple Average Seller’s Discretionary Earnings $646,197 $738,632 $692,415 (SDE) SDE Weighting 20% 80% 50% Cash at Closing 50% Seller Carry Weighted Adjusted SDE $720,145 Cash Flow Multiplier 2.82 Most Probable Selling Price $2,030,808 Most Probable Selling Price, Rounded $2,030,000 Inventory on Hand at Closing, Valued at Cost, With Price Adjusted to Actual $275,000 Most Probable Selling Price Rounded, Including Inventory, Valued at Cost $2,305,000 Price Comparables Including $275,000 in Inventory and Accounts Receivable Multiple of SDE $2,255,399 Based on multiple of 2.75 Multiple of Gross Sales $2,272,819 Based on 40% of Annual Revenue. Prepared by Jacob E. Orosz
  • 9. World of Shades, Inc. Assuming SBA Financing BOX OF "REALITY" BUSINESS PRICING ANALYSIS Based on 2007 $4,782,505 Annual Gross Revenue $738,632 Annual Adjusted Net Cash Flow From Operations $650,000 Book Value of Assets/FFE at the End of the Period $120,000 Accumulated Depreciation at the End of the Period $175,000 Inventory as of the End of the Period $0 Other Annu PRICING SELLER'S ASKING PRICE: $2,300,000 BASIS Assuming SBA Financing LOW MIDDLE HIGH 1. Gross Sales: Annual Gross Revenue $4,782,505 $4,782,505 $4,782,505 Percentage 40% 45% 50% Implied Price of Business 1,913,002 2,152,127 2,391,253 + Inventory 175,000 175,000 175,000 + Other 0 0 0 Most Probable Selling Price $2,088,002 $2,327,127 $2,566,253 2. Book Value of Assets $650,000 + 50% of Accumulated Depr. 60,000 + Annual Adjusted Net C/F 738,632 + 50% Annual Adjusted Net C/F 369,316 + Inventory 175,000 + Other 0 Most Probable Selling Price $1,992,948 3. Net Cash Flow Multiplier: Annual Adjusted Net C/F $738,632 $738,632 $738,632 Industry Standard Multiplier 2.50 2.75 3.00 Multiple of Cash Flow 1,846,580 2,031,238 2,215,896 + Inventory 175,000 175,000 175,000 + Other 0 0 0 Most Probable Selling Price $2,021,580 $2,206,238 $2,390,896 ANALYSIS OF CASH FLOW MULTIPLIER KEY FACTORS & MOST PROBABLE SELLING PRICE FACTOR ASSESSMENT 1. Number of Years Business Has Operated 19 2. Number of Years Owner Has Operated the Business 19 3. Owner's Required Down Payment Percentage 20% 4. Amount of Competition in Market (0=Plenty, 4=None) 2.70 5. Growth of Las Vegas 3.60 6. Number of Buyers in the Market 3.30 7. Industry Growth Trend (0=Declining, 4=Growing) 2.70 8. Location and Facilities (0=Poor, 4=Excellent) 3.70 9. Marketability (0=Poor, 4=Excellent) 2.80 10. Historical Profit Trend (0=Low, 4=High) 2.80 11. Ease of Business Replication (0=Easy, 4=Difficult) 3.20 12. Amount of Risk (0=High, 4=Low) 3.10 Overall Weighted Average of Key Factors 2.880 Implied Price Based on Net Cash Flow Multiplier $2,127,260 + Inventory 175,000 + Other 0 Most Probable Selling Price $2,302,260
  • 10. World of Shades, Inc. Assuming SBA Financing MPSP Proposed Selling Price of the Business $1,925,000 $2,025,000 $2,125,000 Inventory 175,000 175,000 175,000 Other 0 0 0 Total Proposed Selling Price, Including Inventory $2,100,000 $2,200,000 $2,300,000 Maximum Percentage Financed 80% 80% 80% Amount Financed $1,680,000 $1,760,000 $1,840,000 Loan Term Assumptions: Annual Interest Rate 8.00% 8.00% 8.00% Number of Years 10 10 10 Monthly Payments of Principal and Interest $20,383 $21,354 $22,324 Annual Payments of Principal and Interest $244,596 $256,244 $267,891 SUMMARY OF ANNUAL CASH FLOW TO NEW OWNER Cash Flow from the Business (based on prior period) $738,632 $738,632 $738,632 Annual Loan Debt Service -244,596 -256,244 -267,891 Net Cash Flow to Owner After Debt Service $494,036 $482,388 $470,741 Number Times Debt Covered 3.0 2.9 2.8 SUMMARY OF NEW OWNER'S 1st YEAR RETURN ON INVESTMENT AFTER PAYMENTS OF PRINCIPAL & INTEREST RETURN ON TOTAL INVESTMENT Net Cash Flow to Owner After Debt Service $494,036 $482,388 $470,741 New Owner's Investment: Closing Costs Plus SBA Loan Points (2.25%) $47,800 $49,600 $51,400 Total Purchase Price 2,100,000 2,200,000 2,300,000 New Owner's Total Investment $2,147,800 $2,249,600 $2,351,400 Return on Total Investment 23.0% 21.4% 20.0% Months to Recapture Total Invested 52.2 56.0 59.9 RETURN ON CASH INVESTMENT Net Cash Flow to Owner After Debt Service $494,036 $482,388 $470,741 New Owner's Cash Investment (Excluding Working Capital): Closing Costs Plus SBA Loan Points (2.25%) $47,800 $49,600 $51,400 Cash Down Payment 420,000 440,000 460,000 Cash Invested By New Owner $467,800 $489,600 $511,400 Cash on Cash Return on Investment 105.6% 98.5% 92.0% Months to Recapture Cash Invested 11.4 12.2 13.0 The above set forth information has been secured from the Seller. Morgan & Westfield, Inc. in no way guarantees the accuracy of such information, nor does it warrant any assumptions as true and correct. During the due diligence process, it is the responsibility of the Buyer, with the aid of an accountant and/or attorney, if necessary, to independently verify all representations which have been made.
  • 11. World of Shades, Inc. Assuming Seller Financing BOX OF "REALITY" BUSINESS PRICING ANALYSIS Based on 2007 $4,782,505 Annual Gross Revenue $738,632 Annual Adjusted Net Cash Flow From Operations $650,000 Book Value of Assets/FFE at the End of the Period $120,000 Accumulated Depreciation at the End of the Period $175,000 Inventory as of the End of the Period $0 Other PRICING SELLER'S ASKING PRICE: $2,300,000 BASIS Assuming Seller Financing LOW MIDDLE HIGH 1. Gross Sales: Annual Gross Revenue $4,782,505 $4,782,505 $4,782,505 Percentage 40% 45% 50% Implied Price of Business 1,913,002 2,152,127 2,391,253 + Inventory 175,000 175,000 175,000 + Other 0 0 0 Most Probable Selling Price $2,088,002 $2,327,127 $2,566,253 2. Book Value of Assets $650,000 + 50% of Accumulated Depr. 60,000 + Annual Adjusted Net C/F 738,632 + 50% Annual Adjusted Net C/F 369,316 + Inventory 175,000 + Other 0 Most Probable Selling Price $1,992,948 3. Net Cash Flow Multiplier: Annual Adjusted Net C/F $738,632 $738,632 $738,632 Industry Standard Multiplier 2.50 2.75 3.00 Multiple of Cash Flow 1,846,580 2,031,238 2,215,896 + Inventory 175,000 175,000 175,000 + Other 0 0 0 Most Probable Selling Price $2,021,580 $2,206,238 $2,390,896 ANALYSIS OF CASH FLOW MULTIPLIER KEY FACTORS & MOST PROBABLE SELLING PRICE FACTOR ASSESSMENT 1. Number of Years Business Has Operated 19 2. Number of Years Owner Has Operated the Business 19 3. Owner's Required Down Payment Percentage 20% 4. Amount of Competition in Market (0=Plenty, 4=None) 2.70 5. Growth of Las Vegas 3.60 6. Number of Buyers in the Market 3.30 7. Industry Growth Trend (0=Declining, 4=Growing) 2.70 8. Location and Facilities (0=Poor, 4=Excellent) 3.70 9. Marketability (0=Poor, 4=Excellent) 2.80 10. Historical Profit Trend (0=Low, 4=High) 2.80 11. Ease of Business Replication (0=Easy, 4=Difficult) 3.20 12. Amount of Risk (0=High, 4=Low) 3.10 Overall Weighted Average of Key Factors 2.880 Implied Price Based on Net Cash Flow Multiplier $2,127,260 + Inventory 175,000 + Other 0 Most Probable Selling Price $2,302,260
  • 12. World of Shades, Inc. Assuming Seller Financing MPSP Proposed Selling Price of the Business $1,925,000 $2,025,000 $2,125,000 Inventory 175,000 175,000 175,000 Other 0 0 0 Total Proposed Selling Price, Including Inventory $2,100,000 $2,200,000 $2,300,000 Maximum Percentage Financed 50% 50% 50% Amount Financed $1,050,000 $1,100,000 $1,150,000 Loan Term Assumptions: Annual Interest Rate 8.00% 8.00% 8.00% Number of Years 6 6 6 Monthly Payments of Principal and Interest $18,410 $19,287 $20,163 Annual Payments of Principal and Interest $220,919 $231,439 $241,959 SUMMARY OF ANNUAL CASH FLOW TO NEW OWNER Cash Flow from the Business (based on prior period) $738,632 $738,632 $738,632 Annual Debt Service -220,919 -231,439 -241,959 Net Cash Flow to Owner After Debt Service $517,713 $507,193 $496,673 Number Times Debt Covered 3.3 3.2 3.1 SUMMARY OF NEW OWNER'S 1st YEAR RETURN ON INVESTMENT AFTER PAYMENTS OF PRINCIPAL & INTEREST RETURN ON TOTAL INVESTMENT Net Cash Flow to Owner After Debt Service $517,713 $507,193 $496,673 New Owner's Investment: Closing Costs $10,000 $10,000 $10,000 Total Purchase Price 2,100,000 2,200,000 2,300,000 New Owner's Total Investment $2,110,000 $2,210,000 $2,310,000 Return on Total Investment 24.5% 22.9% 21.5% Months to Recapture Total Invested 48.9 52.3 55.8 RETURN ON CASH INVESTMENT Net Cash Flow to Owner After Debt Service $517,713 $507,193 $496,673 New Owner's Cash Investment (Excluding Working Capital): Closing Costs $10,000 $10,000 $10,000 Cash Down Payment 1,050,000 1,100,000 1,150,000 Cash Invested By New Owner $1,060,000 $1,110,000 $1,160,000 Cash on Cash Return on Investment 48.8% 45.7% 42.8% Months to Recapture Cash Invested 24.6 26.3 28.0 The above set forth information has been secured from the Seller. Morgan & Westfield, Inc. in no way guarantees the accuracy of such information, nor does it warrant any assumptions as true and correct. During the due diligence process, it is the responsibility of the Buyer, with the aid of an accountant and/or attorney, if necessary, to independently verify all representations which have been made.

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