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Appraisals and Valuations
Owners and executives should know the value of their company at all times. Otherwise, it is impossible to consistently build enterprise value over the long-term.
Furthermore, owners and executives should know the specific elements that create "Enterprise Value" in their company. This demands more than generating short-term profits. Instead, it requires a focus on building long-term, self-sustaining and increasing cash flows. In addition, these must be "quality" earnings that can be protected from competitive attack.
Hyde Park Group bases its valuations on the price a company will fetch in the marketplace for privately held companies.
Most "professional" appraisers have never sold a company. They have taken courses that teach them how to value private companies as a derivative of the valuation of public companies in a similar line of business, and they examine the public information published about private sales.
This methodology is faulty: public companies are subject to market conditions, bubbles and speculation. The information on private sales is self-reported, and therefore, not reliable; nor, does it include the terms and conditions of private transactions. Without an understanding of the terms and conditions under which a company was sold, it is impossible to generate an analysis that compares one sale to another. And lastly, they use "selling price to revenue" ratios of self reported transactions as a basis for valuation. This is a useless metric inasmuch as enterprise value is driven by earnings and the market value of assets, instead.
John D. Emery has been actively making a market for privately held companies since 1981. This foundational experience provides an authoritative basis on which to render "fair market value" opinions.
Hyde Park's valuations are designed to create a methodology that owners and executives can use to update their estimation of the going concern value of their own companies.
