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Just Other Articles - What Is The Fair Market Value of Your Business? Part 2
Financial Data – What’s Needed?
As a general rule, the more financial data that is available, the better. If your accounting system is sophisticated enough to produce internal Balance Sheets and P&L Statements, they are certainly helpful. Of course the best information to use as a basis is the Federal
As a general rule, the more financial data that is available, the better. If your accounting system is sophisticated enough to produce internal Balance Sheets and P&L Statements, they are certainly helpful. Of course the best information to use as a basis is the Federal
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
Tax Return, since when these are submitted to the IRS, any and all final adjustments have been made. Also, three to five years of returns will give the valuation analyst a better and more consistent track record of the firm’s history. For further insight and/or questions, lean on the valuator for guidan
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
e. Typically, the most important source of necessary data is the owner or CEO (or the CFO if a firm is large enough to support that position), who usually is very familiar with the “financial goings-on” and the specific applicable history.
Present Debt - A Factor?
In the context of placing a value on
Present Debt - A Factor?
In the context of placing a value on
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
a business to be sold, while debt is certainly important, it generally is not something which has a direct influence on business value. Here’s why. When there is long term debt to be considered (any debt to be carried on the books for a period longer than one year), that debt is normally handled by the
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
eller out of the proceeds of the sale. Should it work out as a part of the deal that a given amount of the owner’s long term debt will be assumed by the buyer, that arrangement is customarily a part of the buy-sell agreement as prepared by the attorneys and accountants on one or both sides.
What Should
What Should
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
Valuation Cost?
The fee or service charge for a business valuation/appraisal will vary, dependent on a number of factors. It can run from just a few hundred dollars for a simple “off the shelf” software program, to in some cases tens of thousands of dollars . . . should the project involve a mid-size
The fee or service charge for a business valuation/appraisal will vary, dependent on a number of factors. It can run from just a few hundred dollars for a simple “off the shelf” software program, to in some cases tens of thousands of dollars . . . should the project involve a mid-size
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
or larger firm ($10MIL or more in sales), and if ordered from one of the major accounting or valuation firms. But for most smaller firms, with sales from say $500m to $10MIL, and you are serviced by an experienced valuation professional who does nothing but process valuations, the service fee should fall
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
somewhere in the range of $3,500 to $7,500, dependent upon the size of your firm and the amount of work to be authorized. (In some cases extras amount to the valuation of several different years, several different divisions of the same firm, 5 year averaging, valuation proformas, etc. A valuation profor
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
ma is a valuation based upon projections of expected results) When selected carefully, a focused, verified and veteran approach can produce worthwhile accurate valuations. Which brings us to our next central point. Selecting a valuation professional or specialist to do the work for this very, very imp
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
rtant service.
How To Select A Valuation Service
A story comes to mind which occurred several years ago. When asked who would be doing the required valuation, the client replied “I have an excellent accountant who will be handling that for me.” It was then suggested that the client check to learn how
How To Select A Valuation Service
A story comes to mind which occurred several years ago. When asked who would be doing the required valuation, the client replied “I have an excellent accountant who will be handling that for me.” It was then suggested that the client check to learn how
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
any firms the accountant typically values over the course of a year. I was learned later that the accountant referred to had valued one firm about 18 months ago. Needless to say, the client decided to go with another firm which had more significant and current valuation experience. And please don’t mis
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
construe my intent, as this is not a poke at accountants. Most of those with which we are familiar do a competent and professional job at accountancy and some even have respectable valuation experience and activity. This accountant just did not have substantive valuation experience. The following check
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
list will help with the selection process.
Valuation Firm/Practitioner Check List
• Length of time the valuator’s “system” to be used has been in place
• Printed literature and/or data sheets describing the process to be used
• Variety and size of firms valued in the past
• Frequency of v
Valuation Firm/Practitioner Check List
• Length of time the valuator’s “system” to be used has been in place
• Printed literature and/or data sheets describing the process to be used
• Variety and size of firms valued in the past
• Frequency of v
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
aluation projects
• How final numbers can be verified
• Are comparables of other similar firms provided?
• Lists of prior clients as references
• Testimonial letters from prior valuation clients
• Articles published on business valuation/appraisal
• Ability to provide expert
• How final numbers can be verified
• Are comparables of other similar firms provided?
• Lists of prior clients as references
• Testimonial letters from prior valuation clients
• Articles published on business valuation/appraisal
• Ability to provide expert
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
estimony in court if required
Please notice that the above list does not include certification as a selection criterion. Certification by one of the major business valuation associations is a fine badge to carry, but is no guarantee that the final numbers produced will be more accurate or realistic then
Please notice that the above list does not include certification as a selection criterion. Certification by one of the major business valuation associations is a fine badge to carry, but is no guarantee that the final numbers produced will be more accurate or realistic then
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
those produced by a non-certified valuation professional. The key here is track record, track record, track record! Also, the price you pay for a valuation is no sure bet indicator of the accuracy of the results. A few years ago one of the major business magazines published an article featuring a valua
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
tion “expert” which detailed the valuation assignment of a certain “service” firm. As the article concluded, this valuation analyst quoted the client’s business to be worth 15 to 22 to 61 times earnings. Really. 61 times earnings? (A copy of the article is available upon request) And the lesson here?
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
A big firm and a big fee doesn’t necessarily buy a bullet proof valuation.
In the words of a client who was gracious enough to send us a letter after the sale of her 25% ownership in a retail furniture store . . . . “I did sell my share of the business, which came to a figure resulting from your analys
In the words of a client who was gracious enough to send us a letter after the sale of her 25% ownership in a retail furniture store . . . . “I did sell my share of the business, which came to a figure resulting from your analys
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
is and I am satisfied it was a fair price for the times.” What more can be said! ***
Aids To Help Sellers
Two aids are available to help owners who are thinking of selling. The “Sellers Ten Commandments” is a list of guidelines that will help an owner prepare his business for sale and at the bes
Aids To Help Sellers
Two aids are available to help owners who are thinking of selling. The “Sellers Ten Commandments” is a list of guidelines that will help an owner prepare his business for sale and at the bes
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
price possible. “Debt Service Work Sheet” is an instruction sheet to learn how the mechanics down payment and finance balance interact when a seller plans to offer owner financing. Both are available free by writing Halas & Associates, 425 Roselawn Place, Charlotte, NC., or by email: hbvs@halas.com
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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