Purchase or Sale of Interest
Why use valuations for the sale or purchase of equity interest?
Companies may consider the sale of its equity interests for many different reasons: to raise capital, to support a shareholder buy-out, to establish share value for or comply with buy-sell agreements, or to transition out of the business by selling 100% equity. In addition, companies may consider the purchase of partial or whole interests in another company to expand its geographic markets, diversify its product lines, or improve its supply chain. An appraisal of the subject interest, whether for purchase or sale, by a qualified, independent appraiser provides key decision makers with the critical information they need in order to determine whether the sale or purchase will provide the expected value.
Buy-sell or shareholder agreements often require qualified, independent appraisals of interest considered for sale or purchase. However, even if an appraisal is not required by corporate governance, owners and executives should consider obtaining an opinion from an independent advisor whenever transactions of interest occur or are considered, including:
- when a considered transaction may come under scrutiny by minority shareholders
- a transaction that presents a possible "conflict of interest"
- the issue of a security that could be perceived to unfairly benefit or impair one or another class of securities
- when similar transactions occur with different prices or structures
- if a board or executive team wants to provide a high degree of transaction "diligence"
- when a transaction between related entities occurs
- when equity is used for compensation
Why use BVI?
BVI’s experience includes valuing small to large companies in industries ranging from manufacturing, professional services, healthcare, technology, construction and engineering, food services, consumer goods, distribution, transportation and logistics, and utilities. Our experience includes the valuation of the transfer of interests for both buyers and sellers for a variety of reasons, including all of the scenarios previously listed.
Who can benefit?
Business owners and corporate executives benefit from the clarity valuations provide when considering the sale or purchase of equity interests. BVI's experience at providing thorough, understandable, and defendable opinions of value for a variety of transactions in a broad range of industries gives owners and executives peace of mind when considering or executing purchase or sale of equity interests.