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BUSINESS VALUATION

Business valuation is the core professional activity of Clayton Shultz & Associates, Inc. We prepare valuations on behalf of clients and their accounting and legal advisors for a wide variety of purposes and on a large number of businesses and professional practices, all the way from sole practitioners to multi-million dollar, multi-branch corporations.

Some valuations are prepared to assist counsel in pursuing or defending claims in shareholder disputes, loss of corporate opportunity and wrongful business termination. Non-litigious assignments include consulting engagements assisting clients to prepare their corporations for sale on the open market or to establish values for transactions between family members or to establish fair market value for taxation and succession purposes.

The steps that we take in coming to a valuation conclusion include the following:

  • Interviewing the client's management team and with their accounting and legal advisors;
  • Preparing an engagement letter advising of the approach that will be taken, its timing and an estimate of the total cost;
  • Researching the industry in which the business operates to identify opportunities and threats that enhance or detract from our view of the corporation's sustainable profitability;
  • Review the accounting and legal history of the corporations and examine prior transactions in its shares or shares of similar corporations;
  • Reviewing management and non-arm's length compensation arrangements and, for the purposes of our valuation, adjusting them to reflect the fair market value of the services rendered;
  • If real estate or material fixed assets are part of the corporation, to coordinate the efforts of other appraisers and experts whose work will dovetail with ours;
  • Preparing a detailed report which typically takes the following format:
    • An executive summary estimating the fair market value of all of the shares or, if appropriate, the portion of the issued shares that are the subject of the valuation;
    • A summary of the industry in which the business operates and a complete description of the operations including management duties and responsibilities, uniqueness of the company's operations and competitive advantages if any, and pictures of the operating facilities;
    • An analysis of the historical operating results of the corporation adjusted to reflect those revenues and costs that an independent, arm's length purchaser should reasonably expect to occur in the foreseeable future;
    • An analysis of the approaches to the valuation including comparative market data, if available;
    • The appropriate earnings yield for this business in this industry;
    • An analysis of the net tangible equity of the company; and
    • When the interest being valued is less than 50%, an analysis quantifying the minority discount.
  • Appendices are attached showing the historical earnings, normalized to add or deduct appropriate non-arm's length transactions;
  • A schedule of the past five years' statements of financial position, adjusted as appropriate to reflect the fair market values of the balance sheet components;
  • Operating and financial position ratios;
  • A glossary of financial and valuation terms; and
  • Credentials of the authors.
The reports are produced in hard copy which is delivered along with a CD-ROM in word searchable Adobe format of the report itself as well as supporting documentation.

Clayton is a Fellow of the Canadian Institute of Chartered Business Valuators and has been certified by the American Society of Appraisers (Business Valuation Division). He has written and lectured widely on the valuation of both closely held and publicly traded companies.

Stirling, a financial planner, is midway through the course of studies leading to the Chartered Business Valuator (CBV) designation. He actively assists on all assignments..
# 307 - 1656 Martin Drive, Surrey, B.C., V4A 6E7, Canada
Tel: ( 604 ) 538-1838     Fax: ( 866 ) 432-3769
Toll Free in North America: 1-877-285-3143  Email: info@claytonshultz.com