There are two things that immediately come to mind as you think about an exit in your business. The first is valuation – what is my business worth and what does each shareholder realize out of the transaction. The second is a decision about how well your business is positioned to achieve your objectives in the exit – does it have the attributes that buyers want, does its performance and do the market conditions support getting you to your valuation number and transaction structure.
Ridgefield offers a complimentary valuation service providing a range of potential values based on current market conditions. It gives us a chance to learn about you as you learn about the factors that drive valuation for your business and what you can expect from an exit.
Our first valuation methodology uses a traditional discounted cash flow model, adjusted based on our up-to-date knowledge of factors influencing the discount rate.
We spend time with you understanding your historical and projected cash flows. We then apply a discount rate that reflects the current interest rate environment, industry beta, the size of your company and other factors. From this you can see how the ability of your company to generate cash, both historically and in the future, causes changes in the valuation range.
We provide further information to support our valuation range by applying multiples of revenues and EBITDA to your current run rate performance. These multiples are based on our market knowledge, the size of your business, and other factors such as the strategic attractiveness of your particular company. We make an assessment, based on your input, of the suitability of your business to act as a platform for a financial investor, this can have a real impact on the valuation for particular buyers.
We provide all of this information in a report that you can use to evaluate where you are in terms of exit timing.
Ridgefield is unique among M&A firms in that most everyone you work with at our firm has owned and operated a business which they have sold for their own account. We have sat in exactly the same seat as you — evaluating exactly the same factors, and making exactly the same decisions about our companies as you will with yours. Ask anyone else seeking to work with you on the exit of your business if they can make that same claim.
Having owned and sold our own companies and with our background in investment banking, private equity, and SMB transactions, we are in an excellent position to evaluate your company and its readiness for sale. Based on our discussions with you and based on the valuation, we may have recommendations about your company that, if implemented, would increase your market value based on current market conditions.
We frequently find conditions unique to a specific business that are holding down the valuation or making a realization (exit) more challenging. In these circumstances, it makes sense to evaluate the difficulty of making the needed changes, the time required to do so, and the transaction timing you have targeted.
Ridgefield provides consulting services that help you position your business for sale. We are able to make objective recommendations about challenges and opportunities that go straight to company performance and valuation. We go further than that – along with idenitifying these challenges and opportunities we can work with you – as one operator to another – as you determine what changes you will make in your business and more importantly, how you will make them. Think of us as an advisor that can efficiently come in and give you practical, value-creating recommendations along with actionable steps to accomplish them.