Business Valuation Services

Aleutian is unique among valuation specialists in that we are also principal investors in businesses (through our Aleutian Capital Partners division), and benefit from the resulting real world knowledge when assessing the value of companies.

Our acquisition services group assesses over a dozen companies each week on behalf of our clients across a full range of industries. Our valuation determination is thorough and inclusive of the unique factors affecting each business. Aleutian’s valuation services are available to both owners (sellers) and buyers of businesses.

Our Approach

We determine valuation using the results of three separate sets of analyses: a cash flow assessment, comparable transaction analysis, and an asset assessment.

• Cash Flow Assessment. Cash flow is the basis of any business investment and a vital determinant of value. A business is only worth the free cash that it generates relative to other available investments. Often, business acquirers use a multiple of current cash flow as an initial estimate of value when first assessing a company. We conduct our cash flow assessment by forecasting out the future cash flows from the business, given reasonable assumptions and the historical cash flows as guides. We determine an appropriate discount rate given the risk profile of the company (again, relative to other investments) to determine the present value of those cash flows.
  
  
• Comparable Transaction Analysis. We use our access to third party data covering transactions in the same and similar industries as the subject company to determine what buyers have been paying for comparable companies. This analysis provides an important accompaniment to the cash flow assessment: while the cash flow assessment relies on certain assumptions of growth rate and risk, this analysis is anchored in historical data, providing support to the cash flow value.
  
  
• Asset Assessment. For this analysis, we ignore historical cash flows and determine what it would cost to replicate the business from scratch. This includes the market value of both tangible assets (office, vehicles, etc) and the intangible assets (the marketing that would be needed to create the reputation and customer list the company built, the cost of hiring or training for specific expertise, etc.). Data is not always available to support value estimates of certain intangible assets, but in these cases we are usually able to determine reasonable values based on our experience.

Adjustments to Raw Value

Often, the value determined using the methods described above must be adjusted to reflect specific aspects of a proposed transaction. For example, business valuation can change depending on whether:

• The company is being sold in an asset versus a stock transaction
• There is real estate included in the sale
• Debt is being assumed by the buyer (depending on the terms)
• The business experiences high volatility or has other unique risks
• A single person (often the seller) is vital to the business’s prospects going forward

We apply these adjustments as appropriate to generate a real-world assessment of the value of the company.

Please contact us at 212-652-4000 or via email if you would like to speak with us regarding our business valuation services.