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Strategic Valuations

Purpose: To provide directors and management with objective valuation information on which they can rely when making stock-related decisions.

There are many instances when a strategic valuation may be required, including:

  • Strategic Planning
  • Acquisitions or Divestitures
  • Corporate Recapitalizations
  • Vertical Integration
  • Capital Formation
  • Buy/Sell agreements
  • Management Buyouts

The value of a company to a strategic buyer may be based on more than book value, historical operating results, or an appraisal of fixed assets. Whereas financial buyers are primarily concerned with the return on investment that can be generated on a stand-alone basis, strategic buyers assess the returns that are expected from a business combination, including any potential synergies. In general, the magnitude of the premium above the value of the company to a financial buyer represents the negotiating range between the strategic buyer and seller.

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