Post on 07-Apr-2020
Presentation by the First Nations of Quebec and Labrador,Economic Development Commission for a one-day conference on business transfer, purchase and saleHôtel-Musée Premières Nations, Wendake – September 18, 2019
BusinessValuation
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The Presenter and his Team 3
About Deloitte 7
What is a CBV? 9
Business Valuation Terminology 12
Business Valuation Context 14
A Few Business Valuation Concepts 17
Practical Examples 32
Questions and Discussion 60
Table of Contents
Évaluation d'entreprises et Litige 2
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The Presenter and his Team
3Évaluation d'entreprises et Litige
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The Presenter and his TeamFrédéric Lamonde, CPA, CA, CBV, CFF
• Associate at Deloitte
• Business valuation and litigation team
• Quebec Office (covers all Quebec)
• 23 years experience including 20 years in business valuation and litigation
• CPA Auditor, CA: Quebec Professional Chartered Accountant , Auditor license
• CBV: Chartered Business Valuator (CBVI)
• CFF: Certified in Financial Forensics of the American Institute of Certified Public Accountants (AICPA)
Évaluation d'entreprises et Litige 4
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The Presenter and his TeamValuation and Litigation Services in Quebec
Évaluation d'entreprises et Litige 5
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The Presenter and his TeamValuation and Litigation Services in Montreal
Évaluation d'entreprises et Litige 6
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About Deloitte
7Évaluation d'entreprises et Litige
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More than 2600 employees in 31 offices across Quebec; Deloitte is the largest professional services firm in Quebec.
Leader in the field of professional services in Canada
We are with you Deloitte in Quebec Deloitte in Canada
Number of employees
* Source nombre employés : www.lesaffaires.com (janvier 2017).
58Offices in
Canada
998Business Partners
11 178Employees
11 178Deloitte
6 700PWC
6 500KPMG
5 669E&Y
4 454RCGT
Évaluation d'entreprises et Litige 8
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What is a CBV?
9Évaluation d'entreprises et Litige
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What is a CBV?CBV: Chartered Business Valuator
• The title CBV is the first title granted to professional business evaluators in Canada.
• CBVs are governed by the Canadian Business Valuation Institute (CBVI), particularly for:
− Appropriate training and experience;
− Professional standards;
− Code of deontology.
What is the role of CBV? Quantifying value
• A CBV can quantify the value of a business, its security or its intangible assets.
• In case of litigation, a CBV will quantify the damages or losses resulting from a lawsuit.
• CBV are recognized as experts by courts in questions dealing with financial litigation.
Évaluation d'entreprises et Litige 10
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What is a CBV? CBV: Chartered Business Valuator
Various profiles
• CBVs come from different sectors of activity, including:
− Finance;
− Accounting;
− Law;
− Economics.
• Many hold additional skills in accounting and finance such as CPA, CA, CMA, CGA and CFA.
To become a CBV
There are certain criteria to become a CBV:
• Must be a CPA (CA, CGA, CMA or FCA) or have an equivalent bachelor's degree from a recognized university;
• Complete s six years course with York University (an exam for each course);
• 1500 hours of experience in business valuation;
• Work under a CBV mentor;
• Good professional reputation;
• Succeed final uniform exam (MQE).
Évaluation d'entreprises et Litige 11
The CBVI has 1800 members: approximately 200 in Quebec,including about 30 in the region of Quebec.
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Business Valuation Terminology
12Évaluation d'entreprises et Litige
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Business Valuation Terminology
Évaluation d'entreprises et Litige 13
RNA Restated net assets
EBT Earnings before tax
EBITDA Earnings before interest tax, depreciation and amortization
CAPEX Capital Expenditures
CMPC (WACC) Waited average capital costs
Comparables Similar public corporations in terms of activities or sectors or activity
DFA Deduction for amortisation
WC Working capital
CF Cash flow
UCC Undepreciated capital cost
FMV Fair market value
Transactions Transactions of similar targets in terms of activities or sector of activity
BV Business valuation
MVBC Market value below cost
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Business Valuation Context
14Évaluation d'entreprises et Litige
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Accounting standards
• Purchase Price Allocation (PPA)
• Goodwill impairment test and intangible assets
Transactional
• Selling or buying a company
• Mergers
• Entry/exit of a shareholder
• Partial disinvestment
• Buy-sell agreements
• Related party transactions
• Fairness opinion
• Leverage buyouts (LBO)
• Management buyouts (MBO)
Business Valuation Context
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Business Valuation Context
Litigation support
• Dispute between shareholders
• Shareholder agreement
• Loss of earnings claim
• Breaking a contract
• Family litigation
• Interruption of business after disaster (insurance claim)
Tax planning
• Corporate restructuring
• Intangible asset transfer
− Trademark
− Technology (patent)
− Customer relations
− Etc.
• Estate planning, such as an estate freeze or the creation of a trust
Financial assistance
• Theft from cash flow
• Theft of assets
• Theft of time
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A Few Business Valuation Concepts
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Few Business Valuation Concepts
Definition of fair market value (FMV)
The highest price possible, expressed in cash flow equivalent, that can be achieved in any transaction in a competitive market where there is free competition between a hypothetical buyer and seller, who consent and are suitable for the transaction with no bond ofdependency, are free from all constraint, and are reasonably informed of the relevant facts.
FMV is determined in a notional market (theoretical value).
Price may vary by buyer.
Price is not necessarily equal to value.
Évaluation d'entreprises et Litige 18
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A Few Business Valuation Concepts
Price
• Price may not be the highest price.
• Offsets can include:
− cash;
− shares (with or without restrictions);
− debt securities at rates of interest other than market rates;
− price adjustment clauses conditional on achieving periodic objectives;
− options.
• The parties can be forced to sell or to buy.
• The parties may be linked.
• Any constraint may be invoked.
• The parties are not necessarily informed of relevant facts.
FMB
• This is the highest price.
• The transaction is in equivalent parts of cash flow (liquidity).
• Market where there is free competition.
• The parties consent and are free to enter transaction.
• The parties have no link of dependency.
• The parties are free from all constraints.
• The parties are reasonably informed about relevant facts.
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A Few Notions of Business Valuation
Fair market value
Fair value
Market value
Book valuation
Valuation for the owner
Actual valuation
Intrinsic valuation
Value for replacement as new
Value for depreciated replacement
Value in continued operations
Liquidation value
Bulk value
Sentimental value
Etc.
Évaluation d'entreprises et Litige 20
Concepts of value
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A Few Notions of Business Valuation
• In terms of transactions, it is important not to confuse FMV and the value proposed by owner:
– FMV is less than value for the owner;
– The value of the owner includes personal goodwill.
• Valuation is not an exact science.
• There is not a single formula.
• Rules of thumb have “thick skin” because they are widely used in the market. In general:
– they are not based on the notion of return;
– they are high level estimates who make no distinctions about the players in the industry ;
– they can often be harmful and induce error.
• The risk for the vendor is that he might leave money on the table.
• The risk for the buyer is missing a good business opportunity.
Évaluation d'entreprises et Litige 21
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There are three traditional approach to business valuation:
• Asset-based valuation
• Market-based valuation
• Profit-based valuation
Évaluation d'entreprises et Litige 22
Market
Market comparable companies
Market transactions
Profit
Cash flow actualization
Profit capitalization
Earnings Cash flow actualization
Assets
Liquidation Restated net asset
Forced Ordered EBIDTA, etc.
A Few Notions of Business Valuation Valuation Approach
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The asset-based approach is used when:
• Business dissolution is an option because there is not enough business to sustain continued operation.
• The nature of the business is such that assets represent a major part of the company value, for example:
– Investment companies;
– Real estate companies.
• The company does not generate enough return on the capital invested.
• Goodwill is personal and not transferable.
Évaluation d'entreprises et Litige 23
A Few Notions of Business ValuationAsset-based approach
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The asset-based approach is used when:
• Business dissolution is an option because there is not enough business to sustain continued operation.
• The nature of the business is such that assets represent a major part of the company value, for example:
– Investment companies;
– Real estate companies.
• The company does not generate enough return on the capital invested.
• Goodwill is personal and not transferable.
Évaluation d'entreprises et Litige 24
A Few Notions of Business ValuationAsset-based approach
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Liquidation
When this method is used to valuate a business in difficulty or in liquidation, all liabilities and assets are restated at the net realizable value. Expenses and taxes upon transfer are considered under this method.
Net restated asset
When this method is used to valuate a business, all assets and liabilities appearing on the balanced sheet are valuated either up or down depending on the case, according to the market value at the valuation date and depending on the hypothesis that the business will continue. Taxes in the event of continued operation will be taken into account in order to establish the value of the shares.
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A Few Notions of Business ValuationAsset-based valuation
Assets
Liquidation Net realisable asset
Forced Ordered
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The market-based approach seeks to establish the fair market value of a business by comparing it to open companies or comparable transactions by using valuation multiples.
This method is often used as a means of corroboration for the following reasons:
Transactions usually involve big companies (diversification of products/services, markets, etc.).
No two companies are the same.
Information about private transactions is rarely available.
Évaluation d'entreprises et Litige 26
A Few Notions of Business ValuationMarket-based approach
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Comparable companies
Value is determined by identifying open companies and by comparing them to the company in question.
The following multiples are often used:
• Share price or price/earnings
• EV/EBITDA
• EV/earnings
• Price/Book Value
Market transactions
A value is determined by identifying similar recent transactions which occurred in the market.
The following multiples are often used:
• Price/Earning
• EV/EBITDA
• EV/earnings
• Price/Book Value
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A Few Notions of Business ValuationMarket-based approach
Market
Comparable companies
Market transactions
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The profit-based approach is used to establish the value of the company by using one or more of the following methods in a context of ongoing operations:
Capitalization of discretionary (or representative)
Capitalization of discretionary cash flow (or representative)
Capitalization of EBITDA (earnings before tax, interest and amortization)
Realization of future cash flow after tax
Évaluation d'entreprises et Litige 28
A Few Notions of Business ValuationProfit-based approach
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Capitalization
The following factors will determine the choice of valuation based on capitalization of the results:
• The company achieves a stable level of activities.
• The absence of reliable and realistic financial forecast.
• Significant differences between annual earnings and cash flow.
Realization of cash flow
The following factors will determine the choice of valuation based on the realization of cash flow:
• The company forecast growth during the next year or years before reaching a stable level of activities.
• The company is at the stage of start-up/growth and does not have a history of profits.
• The availability of reliable and realistic financial forecast.
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A Few Notions of Business ValuationProfit-based methods
Profit
Realization of cash flowCapitalization
Earnings Cash flow EBITDA , etc.
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• BV and share FMV are often confused.
• VV is based on the profitability of activities.
• (BV) corresponds to the value of the operating shares (which contributes to the profitability).
• BV does not take into account the financial situation of the company.
• The EBITDA multiple is used to calculate BV and not the FMV of shares.
• However, BV should be calculated based on cash flow before tax:
– EBITDA less:
– Taxes on earnings
– CAPEX (investments to maintain capital expenditures)
– Investment in working capital required to support growth
• In short, using an EBITDA multiple does not reflect two major elements to be considered in business valuations:
• The status of capital expenditures and the needs of future replacements
• The level of noncash working capital required to achieve growth
Évaluation d'entreprises et Litige 30
A Few Notions of Business ValuationBusiness valuation (BV) and equity value (FMV of shares)
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Conciliating BV and share FMV
Take into consideration elements on the balance sheet:
• Less: debts
− Credit line and bank loan (short term)
− Long term debt (including the portion presented in a short term)
• Plus: cash
• Plus: surplus assets after deduction of taxes upon transfer (for example: investments, land, buildings, equipment, etc.)
• Plus/minus: surplus/deficit non-cash working capital*
− Calculated as target/optimal
*”Non-cash” means cash plus long-term debts (margin and bank loan).
Évaluation d'entreprises et Litige 31
A Few Notions of Business ValuationBusiness valuation (BV) and equity value (share FMV)
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Practical Examples
32Évaluation d'entreprises et Litige
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Two very similar transportation company (company #1 and company #2)
Companies have identical balance sheets, namely:
• Total assets of $6.5 M, $4.9 M of which are tangible real assets
• Non-cash working capital about $600 k
• Non-cash
• Interest baring loans (line of credit and long-term debt) about $2.3 M
• Accounting equity or book value approximately $2.8 M
Company #1 generates approximately $10 M in earnings whereas company #2 generates about $11 M in earnings
The cost structures of both company are similar
• Consequently, company #2 has an EBITDA of $1,275 k whereas company #1 has an EBITDA of $1,100 k$
• An EBITDA margin of 11.6%, whereas company #1 has an EBITDA margin of 11.0%
• These superior results may be due to:
− Better use of the fleet
− Better sales price justifying compliance with more regular delays
• Etc.
Évaluation d'entreprises et Litige 33
Practical Examples Situation
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Earnings/typical cash flow
In order to determine earnings (EBITDA) or typical cash flow of the company under evaluation, the following potential adjustments should be taken into account:
• Amortization (cash flow)
• Interests (company value or equity)
• Shareholder/executive salary based on market
• Extraordinary and nonrecurring earnings and expenses
• Announced economic or legal changes
• Earnings and expenses associated with surplus assets
• Non required life insurance
• Gains and losses on capital expenditures, etc.
A weighting has to be attributed to each financial year analyzed.
Évaluation d'entreprises et Litige 34
Practical Examples Return-based approach – Method based on capitalization of typical cash flow
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Practical Examples Return-based approach – Method based on capitalization of typical cash flow
COMPANY #1
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Standardization of historical EBITDA and determination of typical EBITDA
Company #1
Évaluation d'entreprises et Litige 36
Practical examples Determining typical cash flow
2009 2010 2011 2012 2013 Moyenne (1) Retenu(en milliers) $ $ $ $ $ $ $
Chiffre d’affaires 9 500 8 700 9 900 9 800 10 300 10 000 10 000
Bénéfice avant impôts 225 250 250 300 275 Frais financiers 130 125 120 115 110 Amortissement des immobilisations 550 550 575 575 600 BAIIA historique 905 925 945 990 985
Ajustements de normalisation :
Créances douteuses 50 75 Honoraires professionnels 100 Assurance-vie 10 10 10 10 10 Régime de retraite individuel 25 25 Rémunération de la direction 40 40 40 50 50 Autres produits (charges) (8 )BAIIA normalisés 972 1 000 1 145 1 050 1 120 1 110 1 100 Marge de BAIIA normalisée (%) 10,2 11,5 11,6 10,7 10,9 11,1 11,0
(1) : Moyenne 3 ans pour le chiffre d'affaires et 3 ans pour la marge de BAIIA normalisée. Le BAIIA normalisé est exprimé en fonction de la moyenne du chiffre d'affaires et de la marge de BAIIA moyenne.
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Analysis of historical CAPEX and calculating typical CAPEX
Company #1
Évaluation d'entreprises et Litige 37
Practical Examples Determining typical cash flow
2009 2010 2011 2012 2013 Moyenne Retenu(en milliers) $ $ $ $ $ $ $
Acquisition d’immobilisations corporelles 550 600 650 675 625 620 650
Amortissement des immobilisations 550 550 575 575 600 570
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Typica cash flow
Company #1
The following factors are used to calculate typical cash flow:
• Tax on earnings at forecast future rate
• Reinvestments to maintains capital goods, minus future tax savings
Évaluation d'entreprises et Litige 38
Practical Examples Determining typical cash flow
(en milliers) $
Chiffre d’affaires caractéristique retenu 10 000 BAIIA caractéristique retenu (marge de BAIIA caractéristique retenue de 11 %) 1 100
Moins : Impôts sur les bénéfices (256 )Moins : Investissement annuel de maintien en immobilisations corporelles (650 )Plus : Économie d’impôts futurs sur les investissements en immobilisations 112 Flux monétaire caractéristique, avant intérêts 306
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Practical ExamplesDetermining typical cash flow
Typical cash flow before interests is then capitalized using a rate of capitalization which takes into account risk factors thathave an impact on the activities of the company being valuated, including:
The rate of return on investments
Optimized capital structure
Strengths and weaknesses of the company
Perspectives (possibilities and threats) in the sector of activity
Expected long-term growth
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Practical Examples Determining rate of capitalization
Rate of capitalization
bas haut% %
Coût de la dette après impôts (5,25 % avant impôts) A 4,0 4,0
Rendement à l’avoir des actionnaires :Taux sans risque à la Date d'évaluation 2,3 2,3Prime de risque sur le marché selon l'analyse des Conseils financiers de Deloitte 6,0 6,0Prime de risque de l’industrie selon 2013 Valuation Yearbook by Ibbotson SBBI (0,7) (0,7)Prime de risque sur la taille selon 2013 Valuation Yearbook by Ibbotson SBBI 6,0 6,0Prime de risque spécifique de la Société selon nos analyses 1,0 2,0Rendement à l’avoir des actionnaires B 14,6 15,6
Ratio dette-capital selon une structure en capital optimale C 55,0 55,0Ratio avoir des actionnaires-capital selon une structure en capital optimale D 45,0 45,0Structure en capital totale 100,0 100,0
Coût moyen pondéré du capital [A x C] + [B x D] E 8,8 9,2
Croissance à long terme F 2,0 2,0
Taux de capitalisation [E - F] G 6,8 7,2Multiple de capitalisation [100 / G] H 14,7x 13,9x
La structure en capital retenue considère une capacité d'emprunt optimale de 2,7 M$ à 2,8 M$.
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Practical examples Determining FMV
Capitalization and typical FMV
After calculating typical cash flow and the appropriate rate of return, the method for the capitalization of typical cash flow includes, namely, the following steps:
Capitalization of cash flow before interests according to the selected rate of capitalization
The valuation of tax savings linked to tax deductions, where applicable
Calculation of surplus net assets, where applicable
Deduction of debts that carry debts and their equivalent, with deduction from cash flow
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Practical Examples Surplus assets
Identification of surplus assets
Surplus net assets consist of assets that are not required in the normal flow of business of the company being evaluated.
These assets are added to the value of the capitalized typical cash flow.
These are a few examples that can be identified a surplus assets, as the case may be:
Surplus noncash operating fund
Temporary investments
Vacant land
Surplus space (a building)
Redemption value of nonessential life insurance
Personal property owned by the company
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Practical Examples Surplus Assets
Determination of surplus noncash operating fund (OF)
Company #1
(en milliers) $
Fonds de roulement hors caisse à la date d’évaluation 590
Chiffre d’affaires caractéristique retenu 10 000 Fonds de roulement hors caisse retenu en fonction du chiffre d'affaires 5,0%Fonds de roulement hors caisse requis 500
Fonds de roulement hors caisse excédentaire 90
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Practical Examples Capitalization of typical cash flow
Determining the fair market value based on the profit-based approach
Company #1
bas haut(en milliers) $ $
Flux monétaire caractéristique, avant intérêts 306 306 Multiple de capitalisation 13,9x 14,7x Flux monétaire caractéristique capitalisé 4 253 4 498 Plus : Valeur actualisée des économies d’impôts futurs sur la FNACC et le MCIA 567 567 Valeur d’entreprise 4 820 5 065 Plus : Fonds de roulement hors caisse excédentaire 90 90 Moins : Dette portant intérêt et équivalent (2 278 ) (2 278 )Valeur globale des actions 2 632 2 877 Valeur globale des actions (arrondie) 2 600 2 900
Multiple de valeur d'entreprise sur le BAIIA caractéristique 4,4x 4,6x Multiple de valeur d'entreprise sur le chiffre d’affaires caractéristique 0,48x 0,51x
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Practical Examples Asset-based approach – Restated net asset method
Determining net tangible assets (asset-based - restated net asset)
Company #1Aux livres Ajustements ACN
(en milliers) $ $ $
Actif à court termeDébiteurs 1 225 1 225 Frais payés d'avance 400 400 Travaux en cours 0 0
1 625 1 625 Immobilisations corporelles 4 900 300 5 200 Perte d'économie d'impôts 0 (289 ) (289 )Actifs 6 525 6 536
Passif à court termeEmprunt bancaire 210 210 Découvert bancaire 120 120 Créditeurs et charges à payer 885 885 Impôts sur les bénéfices à payer 50 50 Sommes à remettre à l'État 100 100 Portion à court terme de la dette à long terme 700 700
2 065 2 065 Dette à long terme 1 248 1 248 Impôts futurs 450 (450 ) 0 Passifs 3 763 3 313
Capitaux propresCapital actions 100 100 Bénéfices non répartis 2 662 461 3 123 Capitaux propres 2 762 3 223
Passifs et capitaux propres 6 525 6 536
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Practical Examples Final calculation of FMV
Remember that the FMV corresponds to the highest value between the methods used.
Company #1
bas haut(en milliers) $ $
La JVM des actions est le plus élevé de :
Valeur basée sur l'approche de rendement 2 600 2 900 Valeur basée sur l'approche des actifs 3 223 3 223
Le plus élevé 3 223
Fourchette de JVM arrondie (-7,5 % et +7,5 %) 3 000 3 500
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Practical Examples Profitability-based approach – Method based on capitalization of typical cash flow
COMPANY #2
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Standardization of historical EBITDA and determining typical EBITDA
Company #2
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Practical ExamplesDetermining typical CF
2009 2010 2011 2012 2013 Moyenne (1) Retenu(en milliers) $ $ $ $ $ $ $
Chiffre d’affaires 10 500 9 700 10 900 10 800 11 300 11 000 11 000Bénéfice brut 0 0 0 0 0Marge bénéficiaire brute (%) 0,0 0,0 0,0 0,0 0,0Frais d'exploitation (522) (500) (570) (590) (560)Frais financiers 130 125 120 115 110Bénéfice avant impôts 400 375 450 475 450
BAIIA historique 1 080 1 050 1 145 1 165 1 160Ajustements de normalisation :
Créances douteuses 50 75Honoraires professionnels 100Assurance-vie 10 10 10 10 10Régime de retraite individuel 25 25Rémunération de la direction 40 40 40 50 50Autres produits (charges) (8)BAIIA normalisés 1 147 1 125 1 345 1 225 1 295 1 287 1 275Marge de BAIIA normalisée (%) 10,9 11,6 12,3 11,3 11,5 11,7 11,6
(1) : Moyenne 3 ans pour le chiffre d'affaires et 3 ans pour la marge de BAIIA normalisée. Le BAIIA normalisé est exprimé en fonction de la moyenne du chiffre d'affaires et de la marge de BAIIA moyenne.
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Analysis of historical CAPEX and determination of typical CAPEX
Company #2
Évaluation d'entreprises et Litige 49
Practical Examples Determining typical cash flow
2009 2010 2011 2012 2013 Moyenne Retenu(en milliers) $ $ $ $ $ $ $
Acquisition d’immobilisations corporelles 550 600 650 675 625 620 650
Amortissement des immobilisations 550 550 575 575 600 570
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Typical cash flow
Company #2
In order to determine typical cash flow, the following elements have to be considered:
• Tax on earnings and rates forecast in the future
• Reinvestment in CAPEX maintenance, after deduction of future tax savings
Évaluation d'entreprises et Litige 50
Practical Example Determining typical cash flow
(en milliers) $
Chiffre d’affaires caractéristique retenu 11 000BAIIA caractéristique retenu (marge de BAIIA caractéristique retenue de 11,6 %) 1 275
Moins : Impôts sur les bénéfices (303)Moins : Investissement annuel de maintien en immobilisations corporelles (650)Plus : Économie d’impôts futurs sur les investissements en immobilisations 114Flux monétaire caractéristique, avant intérêts 436
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Practical Examples Determining the rate of capitalization
Rate of capitalization
bas haut% %
Coût de la dette après impôts (5,25 % avant impôts) A 4,0 4,0
Rendement à l’avoir des actionnaires :Taux sans risque à la Date d'évaluation 2,3 2,3Prime de risque sur le marché selon l'analyse des Conseils financiers de Deloitte 6,0 6,0Prime de risque de l’industrie selon 2013 Valuation Yearbook by Ibbotson SBBI (0,7) (0,7)Prime de risque sur la taille selon 2013 Valuation Yearbook by Ibbotson SBBI 6,0 6,0Prime de risque spécifique de la Société selon nos analyses 1,0 2,0Rendement à l’avoir des actionnaires B 14,6 15,6
Ratio dette-capital selon une structure en capital optimale C 55,0 55,0Ratio avoir des actionnaires-capital selon une structure en capital optimale D 45,0 45,0Structure en capital totale 100,0 100,0
Coût moyen pondéré du capital [A x C] + [B x D] E 8,8 9,2
Croissance à long terme F 2,0 2,0
Taux de capitalisation [E - F] G 6,8 7,2Multiple de capitalisation [100 / G] H 14,7x 13,9x
La structure en capital retenue considère une capacité d'emprunt optimale de 2,7 M$ à 2,8 M$.
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Practical Examples Surplus assets
Determining surplus non-cash working capital
Company #2
(en milliers) $
Fonds de roulement hors caisse à la date d’évaluation 590
Chiffre d’affaires caractéristique retenu 11 000Fonds de roulement hors caisse retenu en fonction du chiffre d'affaires 5,0%Fonds de roulement hors caisse requis 550
Fonds de roulement hors caisse excédentaire 40
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Practical Examples Capitalization of typical cash flow
Determining fair market value based on the profit approach
Company #2
bas haut(en milliers) $ $
Flux monétaire caractéristique, avant intérêts 436 436Multiple de capitalisation 13,9x 14,7x Flux monétaire caractéristique capitalisé 6 060 6 409Plus : Valeur actualisée des économies d’impôts futurs sur la FNACC et le MCIA 579 579Valeur d’entreprise 6 639 6 988Plus : Fonds de roulement hors caisse excédentaire 40 40Moins : Dette portant intérêt et équivalent (2 278) (2 278)Valeur globale des actions 4 401 4 750Valeur globale des actions (arrondie) 4 400 4 800
Multiple de valeur d'entreprise sur le BAIIA caractéristique 5,2x 5,5x Multiple de valeur d'entreprise sur le chiffre d’affaires caractéristique 0,60x 0,64x
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Practical Examples Asset-based approach – Restated net asset method
Determining net tangible assets (asset-based approach – Restated net assets)
Company #2Aux livres Ajustements ACN
(en milliers) $ $ $
Actif à court termeDébiteurs 1 225 1 225Frais payés d'avance 400 400
1 625 1 625Immobilisations corporelles 4 900 300 5 200 Perte d'économie d'impôts 0 (295) (295)Actifs 6 525 5 6 530
Passif à court termeEmprunt bancaire 210 210Découvert bancaire 120 120Créditeurs et charges à payer 885 885Impôts sur les bénéfices à payer 50 50Sommes à remettre à l'État 100 100Portion à court terme de la dette à long terme 700 700
2 065 2 065Dette à long terme 1 248 1 248Impôts futurs 450 (450) 0Passifs 3 763 (450) 3 313
Capitaux propresCapital actions 100 100Bénéfices non répartis 2 662 455 3 117Capitaux propres 2 762 455 3 217
Passifs et capitaux propres 6 525 10 6 530
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Practical Examples Goodwill and nontangible assets
Determining goodwill and nontangible assets
Company #2
bas haut(en milliers) $ $
Valeur globale des actions 4 400 4 800Moins : Actif corporel net à la juste valeur marchande (3 217) (3 217)Achalandage et actifs incorporels 1 183 1 583
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Practical Examples Nontangible assets
The nontangible assets of a company are defined as the portion of the fair market value which is above the value of the net tangible assets, as determined at the date of valuation.
This usually includes the following elements:
Business brand/name(reputation)
Customer relations
Supplier relations (exclusivity, price agreement, etc.)
Technologies/know-how
Human resources (existence of operating team)
Location of operations
Goodwill (other non identifiable nontangible assets)
In terms of the sale or valuation of a company, by definition, nontangible assets must be transferable in order to have value.
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Practical Examples Nontangible assets
Personal goodwill
Personal goodwill is not transferable.
Personal goodwill occurs when the profitability of the company depends exclusively on the following factors:
Competence of a shareholder or executive
Business relations of a shareholder or executive
Know-how and reputation of a shareholder or executive
Single practitioner working alone or in a group.
Because it is not transferable, good will should not be considered of the calculation of the fair market value of the company.
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Practical Examples Rules of Thumb
Rules of thumb reflect actual transactions for which we do not necessarily have all the relevant information.
There are different types of information which apply to:
Sales
EBITDA
Earnings
Other financial indicators
Number of units
An employee
These rules arise from specific situations and normally involve companies in the same sector which cannot be easily compared.
It is usually impossible to validate their relevance and the date and sources which support such information.
Sometimes the information is outdated and does not represent actual realities.
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Types of Valuation Reports
The title of Certified Business Valuator (CBV) is the most recognized title for this specialization, particularly in Canada. This professional title continues to grow in importance in the business world.
As Certified Business Valuator, we usually practice as independent experts (valuation report) and we also can provide opinions (expert opinion report).
Valuation ReportCalculation of
Value
Estimation of Value
Detailed Report
Expert Opinion Report
The level of confidence in the calculation of value and the extent of work involved distinguishing these two types of report.
A detailed report provides the highest level of confidence regarding the value.
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Questions and Discussion
60Évaluation d'entreprises et Litige
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