Tag Archives: financing

VALUING AND PRICING THE COMPANY (Reposted)

Dr. John Psarouthakis, Founder and former CEO, JPIndusries,Inc., a Fortune 500 industrial corporation. Publisher of www.BusinessThinker.com

Before you can begin final negotiations on price, you need to determine the value of the company. You can use several techniques to value a company.  We recommend the discounted cash flow value approach as the most accurate method although other approaches are useful in preliminary stages of your search to give you a sense of the range of the estimated price.

Timing and Scope of the Valuation Process

An initial calculation of valuation can be done on a fairly mechanical basis, based on information provided to you by the seller using established formulae and guidelines.  However, determining the accuracy of the financial data that the seller provides you is an on-going part of the evaluation process that should take place throughout preliminary and formal due diligence up to the closing.  Thus valuation takes place along with negotiations throughout the deal-making process.  One of the key objectives of due diligence is to surface any information that might affect the accurate valuation of the company. If your team does not have a financial auditor you should hire one to verify the accuracy of the historical data.

Once you verify the completeness and accuracy of existing documents, historical valuation of a company is often relatively easy from a technical standpoint. But it may be a fairly inaccurate reflection of what you can expect from the firm’s financial performance in the future.   Thus, although a preliminary valuation of the company might be done initially when you first receive financial data from the company, refining the financial assumptions about the company’s future performance must take into consideration a wide array of non-financial considerations.  Accurate forecasting requires a thorough understanding of general trends as well, trends specific to your industry, the economy, and of course a thorough understanding of the strengths and weaknesses of the particular company you plan to purchase.

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How To Reboot Europe’s Economy Through Crowdfunding

By Florian Bercault who is a contributor to the Cartes sur Table think tank in charge of economic affairs. Antoine Yeretzian who is a contributor to the same think tank.

For the original article in the Social Europe Journal go to

http://www.socialeurope.eu/2015/12/how-to-reboot-europes-economy-through-crowdfunding/

On June 5th, 1947, the US Secretary of State, George C. Marshall, said at Harvard University:

The remedy lies in breaking the vicious circle and restoring the confidence of the European people in the economic future of their own countries and of Europe as a whole.

Sixty-eight years later, the need for a European economic revival has re-emerged, but this time the cure can’t come from across the Atlantic but from European countries themselves, with the support of their 500m citizens.

Initiated in 2014, the European Fund for Strategic Investments (EFSI) – better known as the “Juncker Investment Plan” – is strong on ambition and range of key targets: infrastructure, energy, innovation, education and SMEs inter alia. But we believe there must be an equally ambitious, radical source of financing: crowdfunding.

Juncker “earmarked” almost €315bn to finance European sustainable growth through more than 2000 identified projects representing a total investment volume estimated at an eye-watering €1300bn. But this is mainly a statement of intent. In real terms, only €21bn from the EU budget and the European Investment Bank will go to replenish the EFSI as a financial guarantee, and the plan counts on a multiplier effect through borrowing and private investment to achieve its multi-billion target. However, the projects led by SMEs are not as numerous as expected, due among other things to the complexity of the project submission process. And there is no means of ensuring that private funds will produce the multiplier effect expected from the confidence boost.

Crowdfunding to the rescue of European investment

To achieve good allocation of resources, transparency and economic efficiency, a 3.0 cure exists: crowdfunding. Imagine a single European platform managed by the EFSI called www.invest-in-your-europe.eu. How would it work? Firstly, project owners would submit simplified proposals that are due-diligence checked by the EFSI. If the projects fulfil the eligibility criteria set by the Plan, they would then be published on the platform.

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WHY BUY AN EXISTING BUSINESS

Richard Parker: is the author of the How To Buy A Good Business At A Great Price© series which is sold in over 80 countries. He is the founder of Diomo Corporation and has personally purchased eleven businesses. Learn more about Richard and his materials at diomo.com

With so many options available to you, the question will become which path of the business ownership arena should you pursue? Between franchises, existing businesses, and start-ups, it can become a bit overwhelming. However, there is one choice that makes the most sense if you want to have your own business.

Your chances of success are clearly best when you buy an existing, profitable business for many reasons which we’ll discuss in a moment.

While the idea of a franchise appeals to many people, don’t buy a new location; buy a resale that’s already successful. This way, you marry the best of franchises and existing businesses.

With a start-up you have two challenges: developing the product or service and then seeing what, if anything, people are willing to pay you for it. It’s a lot of guessing. On paper the plans usually sound great but the results tell a different story. 96% of all start-ups fail in the first five years.

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