The Broker Opinion of Value

Most owners carry a value in their head. It came from a competitor's rumored sale, an industry rule of thumb, or a number they need in order to retire. The Opinion of Value replaces it with something a buyer and a lender would recognize, which is the only version that matters once the business goes to market.

What goes into it

The work begins with the financials: three years of tax returns, internal statements, and a current interim period, reconciled against each other. From there we build adjusted earnings — seller's discretionary earnings or EBITDA depending on the size and the likely buyer — by identifying owner compensation above market, non-recurring items, discretionary personal expense, and any occupancy cost that differs from market rent.

• Adjusted earnings and the documentation supporting each adjustment
• Comparable transaction data and multiples for the industry and size range
• Asset base, equipment condition, leasehold and real property considerations
• Working capital normally required to run the business
• Owner dependence, customer concentration, recurring revenue and the transferability of the business
• Financeability — whether the cash flow supports acquisition debt at a realistic price

The output is a range, not a single number, with the reasoning shown. Two businesses with identical earnings can be a full turn apart on multiple because one runs without the owner and the other does not.

What it is not

It is not a certified business appraisal. A certified appraisal is a formal engagement performed to a recognized standard for a specific purpose — a filing, a contested matter, a court. The Opinion of Value is a broker's view of market price for planning and pre-market decisions. When your matter requires the formal product, we will tell you plainly, and we will not attempt to substitute for it.

Credentials behind the work

Stefan Lagmark is a member of the Institute of Business Appraisers and performs limited independent business valuations, and Alamo Brokers has been selling Texas businesses since 2002 in the $1 to $10 million range. The numbers come from transactions rather than theory.

Confidentiality

Everything is handled under confidentiality and non-disclosure agreement. Nothing is disclosed to any buyer, no client or business is ever named publicly, and you decide whether the finished Opinion of Value goes to your client from us or from you.

When it is a paid engagement

The complimentary version exists because it usually leads to a relationship. Where the valuation is the entire purpose of the work — a partner buy-out, a divorce, a shareholder dispute — it is a paid standalone engagement, quoted before any work starts.