Valuation is critical in a business acquisition. The acquisition agreement needs to support valuation assumptions and appropriately allocate risks between the parties with respect to these calculations. Professionals framing these agreements need to communicate or the risk allocation for key valuation assumptions may not comply with the parties’ expectations. This presentation will be a guide for fostering that collaboration.
35. Revenue
Cost of Goods Sold
Gross Profit
Administrative Expenses
Net Income
Automobile Leases
Aircraft Costs
Lease for Shared Office
Net Savings to Buyer
20x Earnings Value Increase
Value without Add-Backs
Value with Add-Backs
$30,000,000
25,000,000
5,000,000
3,500,000
$1,500,000
$50,000
400,000
50,000
$500,000
$10,000,000
$30,000,000
$40,000,000
( )
( )
36. Showing Value of Add-backs
$30,000,000
$40,000,000
Value without Add-Backs Value with Add-Backs