Valuation of a business for MBO
Valuation of a business and understanding the value of a brand.
The problem
Our client was the management of a business who wanted to carry out an MBO. We were asked to assess the value of the business prior to the negotiations starting.
Solution
There are no shortcuts when valuing a business. It is essential to “get to the heart” of the operation to understand what it is worth. A five year analysis of the company financials and budget projections identified key issues and important trends. We visited several supermarkets to assess the visibility of the products compared to the competitors. Finally, we carefully reviewed their technology licenses before calculating our suggested price range for the negotiations.
Benefit to client:
In this work it was our accumulated experience that added value to the client over and above the task that they had set us. The technology licence agreements contained some cancellation clauses that could be ruinous for the business and the licensing fees being paid were significantly above the market rate so it became clear that it was essential for the MBO negotiations to cover both price and the technology license agreements.
