VALUATION REPORTS – QUALITY OF EARNING (QoE) REPORTS

DO I NEED A VALUATION? DON’T YOU OFFER IT FREE?

Like most brokers, we provide what’s known as a Broker’s Opinion of Value (BOV). This is a high-level estimate based on our familiarity with industry benchmarks and rule-of-thumb multiples—such as EBITDA, SDE, or revenue multiples—especially when we’re dealing with specific industry segments.

However, we typically recommend obtaining a formal business appraisal from a certified valuation professional. Business valuation is far more nuanced than real estate valuation. In real estate, public data on comparable home sales makes valuations relatively straightforward. In contrast, business sales data is not publicly available, and valuation depends on many complex factors beyond just revenue or EBITDA. These include growth potential, customer concentration, quality of financial records, management structure, and more.

Why a Formal Valuation Can Be Valuable

In most cases, an independent valuation offers several key benefits:

• Objective benchmark: It gives you a realistic, third-party assessment of your business’s value.

• Negotiation tool: If buyers’ offers fall short, a formal valuation helps justify your asking price to prospective buyers.

• Strategic pricing: We often use the valuation as a baseline to beat—by attracting strategic buyers and fostering competitive interest, we aim to exceed that benchmark.

• Some of Our Valuation Reports Pre-Qualify Your Business: Our PreQualified Valuation Reports come with conditional approval from 3 lenders  in our network.

Additionally, we’ll credit you 50% of the valuation fee at closing, making it a worthwhile investment.

When a Formal Valuation May Not Be Necessary

There are exceptions where a formal valuation might not be required or practical. For instance:

• Very small businesses with minimal revenue, profit, or just a few physical assets.

• Distressed or inactive businesses, like many small clinical labs, closed after the COVID pandemic.

• Pre-revenue startups or early-stage companies with significant IP and high growth potential, where traditional valuation methods based on revenue or cash flow don’t apply.

OUR VALUATION REPORTS

Essential Business Valuation

 Ideal for buying/selling a small business with less than $750,000 in revenue, 18+ page report, 6-10 days turnaround

• Prepared by NACVA Certified Appraiser
• Asset & Market-based Approaches
• Sales & SDE multiples
• Hand-picked business comps
• Expert-selected financial adjustments
• Video summary + clarifications on any questions

Standard Business Valuation

Ideal for buying/selling any business with less than $50M revenue

• 35+ page report, 6-10 days turnaround
• Prepared by NACVA Certified Appraiser
• Asset, Market & Income Approaches
• Sales, SDE & EBITDA multiples
• Loan payment affordability analysis
• Debt service coverage ratios
• Hand-picked business comps
• List of comparable transactions
• Owner’s compensation analysis
• Expert-selected financial adjustments
• Industry benchmarking
• Video summary + clarifications on any questions

PreQualified Business Valuation (Valuation Report + PreQual)

Helps set a price aligned with how much potential buyers can secure financing from lenders. Includes conditional approval from up to 3 lenders.

This report is similar to the standard Business Valuation Report, except it pre-qualifies the business for financing at the appraised value and arranges three lenders with provisional approval.

Certified Business Valuation

Ideal for legal disputes, divorce, partial ownership interests, estate planning,
and complex M&A activity where close scrutiny of value is expected.

• 65+ page report, 4 weeks or less turnaround
• Prepared and signed by NACVA Certified Appraiser
• Expert selected valuation approaches & methods
• Owner’s interview
• Nature & history of company analysis
• Economy and industry analysis
• Financial condition and earnings potential
• Hand-picked business comps
• List of comparable transactions
• Owner’s compensation analysis
• Expert-selected financial adjustments
• Industry benchmarking
• Video summary + clarifications on any questions

Machinery & Equipment Appraisal

Ideal for asset-backed loans, insurance, or legal disputes

• Desktop Appraisal: remote appraisal; client provides photos of assets.
• On-Site Appraisal: includes on-site physical inspection and photos of assets.

Quality of Earnings Report

Ideal for validating the accuracy of a company’s reported earnings

• 4-6 week turnaround
• Prepared by NACVA Certified Master of Financial Forensics
• Two years of cash proofing
• Financial statement vs. tax return analysis
• Customer concentration analysis
• Sales trends, vendors, expenses, A/R aging, labor & salary analysis
• Excel workbook with detailed analysis
• Consultation with expert

OUR VALUATION TEAM LEADER

Shelia Darby, MBA, CVA, MAFF 
Affiliate Valuation Expert

We have teamed up with Sheila Darby and her team of experienced NACVA-certified appraisers. Sheila has 20+ years of experience as a valuation and financial professional. She is a recognized thought leader in valuing complex initiatives and companies. She has worked on projects ranging from asset to company valuations. Past projects have included work for companies ranging from Fortune 500 to small, privately held businesses.

Ms. Darby provides certified valuation reports that deliver the insight and credibility needed to facilitate deal-making and successful resolutions. As a certified business appraiser, she adheres to the high standards set forth by well-recognized, accredited organizations.

For TechnologyPark, she provides the highest level of third-party financial analytics and valuation assistance.

Ms. Darby provides certified business valuations of closely-held businesses. Her 20+ years of valuation experience spans numerous industries, ranging from energy/mining, construction/real estate, retail/wholesale, and manufacturing to finance/insurance, services, professional, and health. Ms. Darby formerly served as the Assistant Treasurer of Transocean and held various valuation, finance, and strategy roles at ConocoPhillips, AGL Resources, and Enron Corporation. While at ConocoPhillips, she led the strategy and finance department of the company’s largest business unit in Norway. She also enjoyed teaching the valuation and economic modeling course to over 250 employees in North America, Asia Pacific, and Europe. Ms. Darby reviewed the valuation and finance approvals for over 100 acquisitions and dispositions during her tenure.

Ms. Darby holds an M.B.A. from Rice University, a B.B.A. in Finance from Baylor University, and professional certifications from the National Association of Certified Valuators and Analysts (NACVA), including the Certified Valuation Analyst (CVA) and Master Analyst in Financial Forensics (MAFF) designations. She is also a certified Project Management Professional (PMP) from the Project Management Institute (PMI).

Ms. Darby is a current board member of the Ethics and Oversight Board of NACVA and President of the NACVA Houston State Chapter. She is also the Treasurer of the Texas Association of Business Brokers—Houston Chapter. She enjoys spending time outdoors with her family and is often found in the stands at a softball field, watching her daughter play.

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