Business Buyers Need The Business Ferret

Buying a publicly-traded company

For the uninitiated, buying a publicly-traded company seems like a breeze from a valuation standpoint. Everything is public and monitored, right? Anyone who has been a part of a public company deal knows that this couldn’t be further from the truth. The valuation of a public company is very difficult without the right tools and important information can easily slip through the cracks.

Minority or majority basis trading

For publicly traded businesses there is an active daily trading market for the stock (equity) and bonds (debt) of these companies. Although the trading of the stock is on a minority basis (non-controlling interest) it does establish value ranges for a company. A full buy-out of the controlling interest requires negotiation on a majority basis (or company controlling interest). This method of evaluation generally results in a premium value above the previous stock market value (on minority basis trading).

Hidden information

As transparent as a publicly-traded company can seem, there is a lot of information buried in the income statement and balance sheet. The Business Ferret can sniff out key metrics like cost of capital and return on assets and show their trend over time. What is the net trade cycle, the use of excess cash, and the total debt over time? Numbers like these can break a company wide open and show you, the buyer, what you’re really getting into.

Buying a small business

Small businesses (under $5 million of annual revenue) are unique due to the unique personalities of their owners, even within the same industry. The owner’s personality permeates every aspect of the business operation – whether good or bad. When the owner of a small, privately held business firmly believes their business is unique, the owner’s ideas about valuation of the business will be highly flawed. This makes a valuation created within the company very questionable.

An unbiased review

Many businesses are bought or sold without an independent review of value. This approach may appear to save money (the cost of a valuation) but it’s a very risky proposition. Without a clear and unbiased review of critical business finance information, most of the success or failure of the business after the transaction is left to chance. The entire health of that company is a gamble!

The Business Ferret takes the largest risk factor out of a large investment: the current financial standing of the company on the table. Just having the company financial information leaves you in the dark, you need to know their return on assets, their debt-free cash flow, and their pricing policy. Using 12 rock-solid financial indicators, the Business Ferret uncovers