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or a cash flow lender, or a mezzanine lender, or a combination
of these parties). Similarly, BVX valuation will be different if the transaction
is an asset purchase or a stock purchase. Similarly, BVX valuation will be different
depending on operating parameters, financing, and future performance.
BVX results are more believable, because they are
based on objective inputs. BVX does not use any formulas, nor does it use any market
data. Subjective inputs like weighting factors, cost of capital, selection of valuation
method, selection of basis for earnings etc., are all eliminated in the Equilibrium
method used by BVX.
Valuation In Seconds, easy-to-use and easy-to-learn:
The power of Business ValueXpress (BVX) is easily
deployable with extreme ease. One user said,
“BVX is a shoulder fired, thermonuclear
deal weapon.” G.R., New Jersey
Due to one-screen operation and user-friendly intuitive
interface, a person with financial background can complete a business valuation
in a breeze. The “new valuation” template, that opens every time one starts BVX,
requires only nine input parameters to complete a first-cut valuation for a new
business. BVX eliminates subjective inputs, and limits inputs to those which are
most critical, are operations driven, and are easily available. This makes it one
of the easiest, but most powerful business valuation software.
BVX has many features that are not
available elsewhere.
Unique Features:
Business ValueXpress (BVX) provides many features
that are not available anywhere else. Some of these unique features are,
- Simultaneous determination
of, 1) selling price, 2) buyer equity, 3) gap financing (often-called seller financing),
4) goodwill, 5) cash down payment to seller, and 6) Mezzanine equity.
-
Stock vs. Asset Valuation,
- Cash Value vs. Financed Valuation,
-
Impact of tax-driven purchase price allocation,
- Strategic Buyer impact,
- Exit Strategy
impact,
- Seamless transition between valuation
and deal structuring,
- Instantaneous "What
if" analysis, etc.
Other Features:
- 5 year inputs
-
Financing Inputs: Revolver, Term Loan, Over Advance Loan,
Loan with Deferred Principal, Balloon Loan, and Mezzanine financing with principal
amortization and deferred principal payments.
- Non-compete and Consulting payments.
-
Independent Real Estate financials and ROI analysis. (Note:
BVX does not value real estate, but does analyze its financials).
- Reports can be printed or
exported to Excel. The reports consist of: 1) a two page Summary report of valuation
results and all inputs, and 2) detail back-up reports of income statement, balance
sheet, cash flow, ROI, sources/uses of funds, purchase price allocation, bank loan
details, depreciation schedules, etc.
BVX is a paradigm shift in the field
of business valuation theory.
Commonly known finance theory states, “… the value of
the firm is independent of financing…” Such theory and its advancements have been
the foundation for corporate valuations. However, the real world has significant
deviations from the simplified assumptions used in such theories. In real world,
value of a firm depends on available financing, terms of the deal, the structure
of the deal, and operating parameters.
Business ValueXpress (BVX) defines Value of a Firm
as,
“Value of a Firm is the Equilibrium of
Price, Terms, and Deal Structure that satisfies the needs of all parties to an M&A
transaction.”
BVX calls this approach to valuation as the Equilibrium
method of valuation.
Using BVX’s Equilibrium approach one values businesses
based on Future Performance, Financial Leverage, Financial Return Expectation, Cash
Flow (Not Profits), Deal Structure, Asset Type, and Exit Strategy. For more discussion
see Valuation Approach of Business ValueXpress.
The Equilibrium approach satisfies the needs of all parties
to the transaction; specifically, the needs of the seller, the buyer, the lender,
the tax authorities, and the business itself. Some of the needs that BVX satisfies
are maximize selling price, minimize buyer equity, achieve buyer’s ROI target, meet
lender obligations, pay all taxes, fund working capital etc. For more discussion
see BVXMethodology.
BVX is a management tool to understand
shareholder value-drivers.
Owners are always interested in increasing shareholder
value. To this end, sales and profit improvement get the most attention. However,
there are other value-drivers that can improve shareholder value. The interactive
capability of Business ValueXpress (BVX) is designed to help quickly identify
and quantify the impact of other value-drivers. For example,
What is the impact on business value of
quality financials, or good inventory counting?
Does higher profit margin mean higher
price multiple, or higher value, or both?
BVX is a powerful tool for instantaneous “What if” analysis.
Many of its answers are counter-intuitive, and often, unexpected.
BVX moves valuations from the back-office
to live & interactive valuations on the laptop.
Why are business valuations done in the
back-office?
Why is business valuation a big “Project”?
The objective inputs, and the resulting objective valuation
of Business ValueXpress (BVX), empower the user with the confidence of doing live,
frequent, and interactive valuations in front of the clients. No longer business
valuation has to be limited to the back-office; it can be done on the laptops with
the clients. BVX is being used on a negotiating table to help bridge differences
of various parties. BVX eliminates the defensive posture that one needs to take
to avoid explaining subjective assumptions of traditional valuation approaches.
With BVX, there are no inputs for choosing valuation methods, weighting factors,
selecting earning basis, cost of capital etc.
A seamless valuation tool and a deal
structure tool in one product.
Business ValueXpress (BVX) provides two powerful business
valuation tools in one software product; a Valuation tool and a Deal Structure tool.
A single common screen is used for doing valuations, and for analyzing deal structures
and “What if” scenarios.
As a valuation tool, BVX determines the “Best Value” that
satisfies the needs of all parties to a transaction. The “Best Value” is where most
transactions occur, because it is not only the highest value for the seller, but
it meets the expectations of all other parties to the transaction.
The Deal Structure capability of BVX is unmatched in its
flexibility, ease-of-use, instantaneous results, and guided feedback. Its use is
limited by ones imagination and understanding of financials
What would happen to cash flow and ROI,
if the offer were increased?
What should be the price decrease if the
financial markets tighten-up?
What are the economic implications of
changing an Asset offer to a Stock offer?
What happens if growth projections do
not come true?
What happens if the profit is less than
expected?
If any input is changed, after determining the “Best Value”,
BVX automatically changes into an “interactive” mode. All outputs are instantaneously
changed, as inputs are changed. For example, if the deal structure is changed from
an Asset Purchase to a Stock Purchase all outputs (including Buyer ROI, income statement,
balance sheet, cash flow, etc.) are changed automatically. Similarly, if the deal
is modified for price, or equity, or growth assumption, or lender financing terms,
all results are changed automatically. BVX uses intelligent color-coding to flag
areas where the needs of the parties are not satisfied.
BVX can be used for small or large
business, any type.
Business ValueXpress (BVX) has been used in many different
industries for valuation of small mom-and-pop businesses requiring no bank financing
to large privately held business requiring multiple layers of financing. Even though
BVX inputs are independent of the size and the type of the business, its valuations
equal actual market transactions. Why are BVX valuation results so accurate? This
is due to the fact that BVX relies heavily on the operating characteristics of the
business, and the ability to get financed; these factors presumably reflect its
size, industry, and overall health of the economy. The fundamental premise of BVX
is that the valuation of a company is company-specific, not just industry-specific.
For example, lets us say there are 3 companies manufacturing
Grabule, a health care product. Assume that each one of them makes the same profit,
has the same growth opportunity, and can get the same financing terms. One company
sells to the drug stores, the second to the hospitals, and the third to the retail
customers with credit cards by phone. BVX will come with a different valuation for
each of the three companies; conventional methods will not.
For Mergers & Acquisition Advisors,
Business Brokers, CPA’s, Lenders, Financial Advisors, Sellers, Buyers, and Attorneys.
The convenience and the accuracy of Business ValueXpress
(BVX) opens new markets for decentralized business valuation in the hands of many
users. Following observations are based on user feedback.
- BVX helps M&A advisors
and business brokers to improve deal screening prior to engagements, to manage buyer/seller
expectations, to reduce deal collapse, and to recover from cratered deals.
- CPA’s and Accountants can
now do in-house business valuation, and immediately provide detail financial statements
that can be taken to the bank. They can stand behind their work without having to
rationalize subjective assumptions of conventional methods. They can now offer an
annual check-up of business valuation to their clients.
Many CPA’s are able to use this fact for cost justification
for improving client’s financial reports. Higher quality financial statements improve
financing terms form the lender which in turn increases the value of the business
- Financial advisors, whose
clients are business owners, find that their selling cycle has dramatically reduced.
They no longer have to wait months for the business owner to get an outside business
valuation.
-
Sellers, who have some financial familiarity, can perform their own valuations.
BVX helps management understand shareholder value impact resulting from decisions
that involve working capital and capital expenditures; because working capital and
capital expenditures are an integral part of BVX business valuation.
- BVX helps buyers make an defensible
offer based on their projections, ROI expectations and ability to get it financed.
BVX also helps the buyer develop creative deal structures to satisfy the lender
and the seller.
-
Lenders and attorneys can use BVX for a quick in-house assessment of the transaction.
BVX performs 500,000 to 10+ million
calculations per business valuation.
Business ValueXpress (BVX) does not use any formulas,
nor does it use any market data, nor does it use any known valuation methods. How
does then BVX determine the valuation of a business?
BVX uses random numbers generators to start with a set
of numbers for the selling price, the buyer equity etc. It then calculates a complete
set of financial statements for these assumed set of numbers. Then it tests to see
if the financial statements satisfy the needs of all parties to the M&A transaction.
If all needs are not satisfied, BVX changes the starting set of numbers and tries
again. It goes through this iterative process until all requirements are satisfied
and the selling price is the maximum. The number of calculations can vary depending
upon the random starting position of the key variables, and depending upon the complexity
of the valuation. Typically, BVX would perform 500,000 to 10+ million calculations
per valuation. For more discussion see BVX methodology
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