Business Valuation Services
To answer the question, "How much is this business interest worth?” is not that simple. Experienced professionals are necessary to perform appropriate analysis and review of facts. Business valuations are impacted by numerous factors, including economics, industry, the company’s life cycle, sources of invested capital, and the premise and standard of value required.
The valuation of a business requires knowledge of historically created value, as well as how value will be created in the future. This process of creating value is unique to each business and can be achieved through many different paths. Our understanding of this process, which we have developed through years of experience, is key in our analysis.
The common valuation approaches of cost, market, and income all use a technical approach of analytics and formulas subject to various inputs. This aspect of the process is considered scientific, but there is also an art side to the valuation. The art lies in the ability to apply necessary resources effectively and exercise professional judgment. The art of valuation is gained over years of experience servicing businesses of various life cycles, industries, jurisdictions, and valuation purposes.
Our valuation practitioners can perform valuations for business combinations, business interests, intellectual property, intangible assets, common and preferred stock and other securities, private debt instruments, options, warrants, and other derivative products. These services may assist clients with mergers, acquisitions, and dispositions; financial reporting; bankruptcy and reorganization; or strategic planning.
Business Combinations + Purchase Price Allocation
Not only do our professionals have a thorough understanding of financial reporting requirements according to Accounting Standards Codification (ASC) Topic 805 – Business Combinations, but they also have a comprehensive understanding of the accounting standards in their entirety. This enables us to offer practical insights into the questions and concerns of clients, auditors, and regulators.
ASC 805 requires that all consideration transferred be measured at its acquisition date’s fair value, with limited exceptions. If a business combination occurs without the transfer of consideration, then the acquirer would use the fair value of the acquired interest as a substitute for the consideration transferred. The following categories of intangible assets must be considered in the search for identifiable intangible assets during the allocation of the purchase price:
- Marketing-related intangible assets
- Customer-related intangible assets
- Artistic-related intangible assets
- Contract-based intangible assets
- Technology-based intangible assets
RRBB can help you address complex valuation issues arising in the context of ASC 805 as well as areas including:
- Valuation or structuring of contingent consideration and modeling potential future earnings impact
- Valuation of contingent assets and liabilities
- Pro forma allocations required for filings with the SEC and other regulators
- Acquisition-date fair value measurement of the consideration transferred, any previously-held equity interests, and any remaining noncontrolling interests
- Acquisition-date fair value measurement and economic life analysis of acquired identifiable intangible assets and intellectual property such as brands, technology, in-process research and development, and customer relationships
- Fair value measurement of contract liabilities and other liabilities
- Valuation of options to buy/sell equity interests
- Valuation of derivatives and other financial instruments and their subsequent mark-to-market, when required
- Allocation of purchase price and goodwill to reporting units
Complex Financial Instruments
Our professionals specialize in developing models and supportable inputs for these valuations. They have broad technical and quantitative expertise, market knowledge, and innovative thinking that helps our clients to understand complicated issues.
We provide valuations for common instruments, such as:
- Debt/Equity Derivatives (conversion features, anti-dilution terms, options, warrants with down-round provisions, total return swaps, etc.)
- Valuations for Equity Awards and Share-Based Compensation
- Contingent consideration/earnouts
- Convertible debt and notes
- Public and private warrants, founders’ shares, and PIPE investments within special purpose acquisition companies (SPACs)
- Preferred and common stock in complex capital structures for public and privately held companies
RRBB has extensive experience with equity valuation techniques, including:
- Monte Carlo simulation analysis
- Binomial lattice models
- Closed-form solutions such as the Black-Scholes formula
- Least Squares Monte Carlo simulation
Intellectual Property + Intangible Assets
Intellectual property (IP) assets such as patents, trademarks, trade secrets, and copyrights are essential for many businesses. Knowing the value of these assets is just as important. Understanding the value of intangible assets can be challenging for many, but the process begins with asset identification. RRBB has experience valuing intangible assets, such as:
- Assembled workforce
- Brand names
- Copyrights
- Corporate goodwill
- Customer contracts
- Customer lists
- Customer relationships – non-contractual
- In-process research and development
- License agreements
- Development stage consumer products
- Non-compete agreements
- Order backlog
- Patents
- Software
- Technical know-how
- Trade dress/logos
- Trade secrets
- Trademarks
- Trade names
- Unpatented developed technology
Oftentimes, intangible assets do not generate income. However, if income is generated, it cannot be generated in isolation. In addition, due to their nature, intangible assets are constantly changing. Therefore, the value of intangible assets changes over time. RRBB’s experts can help you achieve your goals by providing high-quality, independent, third-party valuations.
Goodwill + Intangible Asset Impairment
RRBB has an extensive understanding of the requirements of Accounting Standards Codification (ASC) Topic 350, as well as common concerns of auditors and the SEC. Our experience and knowledge allow us to assist management in identifying areas with risk of impairment.
We can assist you with issues in the impairment testing of goodwill and indefinite-lived intangible assets, including:
- Assignment of goodwill, acquired assets, and liabilities to reporting units
- Support for the optional Step 0 qualitative assessment as part of the goodwill impairment test and impairment test for indefinite-lived intangible assets
- Measure the fair value of reporting units
- Measurement of the fair value of indefinite-lived intangible assets, including IPR&D
RRBB’s expertise includes knowledge of ASC 360, the recoverability test, and the fair value of long-lived assets, such as property, plant and equipment, and finite-lived intangible assets.
Impairment is the condition that exists when the carrying amount of a long-lived asset exceeds its fair value. Whether a long-lived asset is held and used or to be disposed of by sale determines how to measure, recognize, and present the carrying amounts of such assets in the financial statements.
We can assist you with a variety of issues in determining the recoverability and fair value measurement, as required, of long-lived assets, including:
- Analysis of projections to assess the recoverability of the asset or group
- Measurement of fair value for those assets that fail the recoverability test
- Measurement of the fair values to assist management with the allocation of impairment loss
