Business Valuation

Ceres provides valuation opinions of closely held businesses and product lines.

Preliminary documents and information checklist for business valuation

Types and Definition of Value

A highly comprehensive analysis using multiple approaches converges on a valuation range. Understanding the value from potential acquirers' perspectives - financial or strategic -  is critical in determining the return on investment in any changes made to the company or product line prior to marketing it, screening potential acquirers, and facilitating the negotiation process.

Fair Market Value

Investment Value

Investment Value of equity as a going concern is the specific value of an investment to a particular investor/buyer or class of investors/buyers based on individual requirements. This value most closely represents the amounts strategic buyers with operating and market synergies would pay for the Company.  Analysis may include the Income and Market approach from the perspective of a strategic buyer. 

Approaches

Income Approach

The income approach often employs the Discounted Cash Flow (DCF) method where the net present value of forecasted future cash flows from the potential acquirers' financial perspectives is discounted at rate to reflect systematic and unsystematic risk.  With its uniquely deep and broad understanding of the photonics industry and the vertical markets served, CERES prepares Performa financial valuation models that include:

• Future revenue from our client's product lines and/or licensing of its intellectual property
• Future revenue of the potential acquirers’ complimentary product lines
• The potential acquirers’ operating cost structure, capital structure and distribution channels
• The potential acquirers' incremental investment in engineering, sales and marketing to integrate the company or product line 
• Discount Rate that reflects current market and technology risks

In addition to the DCF method, the Income approach may also employ the Real Option Valuation (ROV) method to incorporate the flexibility, for example, of the strategic buyer’s decision as to whether and when to exercise the option of taking a Company’s technology product platforms to additional markets or to incorporate the volatility in forecasting.

Market Approach

The market approach employs the Guideline Public and Guideline M & A methods where the valuation is based on multiples of revenue, earnings or assets for comparable recent public company sale or M & A transactions in the industry.  The multiple is adjusted to account for differences in capital structure, intellectual property position, cost structure, competitive market position, technology risk, and market risk.