"Valuation" vs. MVA©
678-820-5288
We’ll help you learn what your company is
really worth to most Buyers.
Cogent is the industry leader in IT Services M&A and we know many of the Buyers, and most importantly, how Buyers think and why. While there are many opinions on how to value an IT Services company, from myriad sell-side sources, it’s a Buyers opinion that really matters most.
While peer groups do a wonderful job helping you understand how to run a great IT company (and make more money), statistical data is not how any Buyer decides what to pay. If you simply want to understand, or actually need to know, what your IT Services business is worth today from a Buyer’s perspective, we can help, right now, with our Market Value Analysis© report.
With >100 closed IT Services deals since our inception, and still counting - we really know buyers. We know how they think, how they model opportunity and deal structure, and most importantly, we know how they model purchase price from their business perspective.
When is the last time a Buyer said, “I have an idea, let’s use your valuation to set the purchase price!”
If you said "Never" you'be be correct. A common valuation rarely has any relevance to the “purchase price” that a Buyer would actually pay for your IT Services business because it is often reliant on statistical sell-side data, or sell-side data from other deals as “comps” (note: selling a business in not analogous to selling a house – though many try to make it so), or a “recast” of your financial history – which is basically just fiction – that no buyer will trust.
We could write a book on all the reasons that deals do happen, and why they don’t (hmmmm, that’s a good idea), but in our experience it’s mainly because the prospective seller either understands the business reasons why their company is worth what the Buyer wants to pay them, or they don’t. Our MVA process will help you understand why.
Since the inception of Cogent in 2010, we have been producing and delivering our proprietary Transaction Analysis Model (“TAM©”) exclusively for our buy-side clientele, with great success (it really works), but it was always intended for “client-eyes-only” and we did not have a like product designed for “Value-Curious©” IT business owners to review for themselves.
Until a few years ago that is, when a company owner said, “I am not ready to sell right now, but I’d really like to know what my company is actually worth. You guys know most of the buyers out there, so why can’t you let me pay you to create a TAM© just for me so I can understand what your buyers would think I’m worth? And more importantly, why they think like that?”
So, after spirited internal discussion amongst our Cogenteers, and after consulting with a number of our regular clients, we all agreed to create and deliver our first ever Market Value Analysis© report (“MVA”), based on using our TAM© at its core. It was so well received that the client actually used it to negotiate the exact purchase price we recommended to sell their business to a group they already knew (news to us at the time), and they even introduced us to their buyer, who hired us on a project basis to help them work through part of the deal. We were thrilled to help and the MVA was christened.
Our MVA© is proprietary and unique to your IT business. It is relevant to the state of the market today and it contains exactly the same information that our buy-side clients use to help determine the actual purchase price and structure for their deals, from their “Buyer’s Perspective”.
Our MVA© process will help you understand what your IT company is worth from a buyers perspective, and what you can do about it. We’d be happy to have a conversation about your needs and how we can create an MVA just for you.
Our MVA© reveals what a likely buyer for your business would consider as they determine what your company is worth to them, including:
- We’ll work with you to create and review our Buy-side Transaction Analysis Model© (TAM) of your IT Services business, created as if you were intending to sell your company in today’s market to a willing buyer, with low/median/high price guidance, and all the supporting information to back it up (we’ll provide a detailed outline in an SOW once we are under NDA with you -- we can’t just publish our secrets on the internet, right?), all delivered in Spreadsheet format for easy reference.
- Once the TAM© is completed and approved, we can then create the MVA© report specific to your company, including:
- We will deliver an MVA© report customized to your company, along with the with the TAM©, all of which we will review in detail with you. The report will include:
- Delivery of the completed TAM© in Spreadsheet format;
- Our narrative on general findings specific to your company;
- Buyer points-of-interest (what to keep doing and what to improve)
- Risk factors (pro and con, and what can be improved)
- KPI’s and comparison to nominal ranges we recommend (for bench-marking)
- Green flags (things you are doing well and should continue to enhance)
- Fair market purchase price guidelines from low to high, based on our experience, the granular details of your company, and our perspective on how you are a fit, or not a fit, with the buyer population generally;
- Various deal structures and payment alternatives that would be most likely given your present operational maturity and risk profile;
You can then use your MVA© report and accompanying TAM© as a road map to guide you. It’s very useful for ongoing internal reference to help you work toward your price range goals and set benchmarks to help get you there, (or to exit to a partner, or buy out a partner, or spouse, or use it for your ESOP, or for an employee value appreciation program, and myriad other uses), or to help make a deal happen – your choice.
Generally, the MVA© report is a very valuable tool. What you do with it is up to you, but we can help make it work for you!