Situation

A supplier of office products had one absentee owner who no longer desired to own the business. The business’s management team desired to acquire the business from the owner and elected to use an SBA loan to finance the acquisition. The management team went to their local bank to obtain the SBA loan. As part of the process, a valuation needed to be performed on the company by a qualified appraiser in accordance with SBA valuation guidelines.

Engagement

Mariner Capital Advisors was contacted by the management team and its bank to perform a valuation for the SBA loan. We were engaged directly by the bank in order to maintain our independence as requested by the SBA. Additionally, due to the time-sensitive nature of the acquisition and the SBA loan process, we were asked to complete the valuation within 10 business days.

We quickly collected the necessary documentation, which included financial statements and tax returns, from the company’s management team. We then used this information to compile a list of questions that our analysts could use to gain a better understanding of the borrower’s business. These questions were raised during a conference call with the company’s management team, who provided responses, along with historical details about the business, insight and outlook concerning the office products industry, and other factors that can have an impact on the value of a company.

The company’s organized financial statements and steady business operations streamlined the financial statement analysis process, allowing us to focus the majority of our efforts on the specific characteristics of the company and how those characteristics impacted assumptions we formed as part of the valuation methodologies we employed.

Result

We were able to complete our report within 10 business days while still following USPAP (Uniform Standards of Professional Appraisal Practice) and the SBA valuation guidelines. Additionally, we provide the management team and the current owner with the fair market value of the company, allowing both parties to be confident in the price at which they would transact the business. Our report also provided the management team with in-depth research and analysis of external economic factors and industry trends impacting value.

This document is for informational use only and may be outdated and/or no longer applicable. Nothing in this publication is intended to constitute legal, tax, or investment advice. There is no guarantee that any claims made will come to pass. The information contained herein has been obtained from sources believed to be reliable, but Mariner Capital Advisors does not warrant the accuracy of the information. Consult a financial, tax or legal professional for specific information related to your own situation.