Strategy and Business Valuation
We have demonstrated expertise in strategy and business valuation. We consult with management in a variety of organizations on value-maximizing business strategy, investment opportunities, franchise networks and the value of individual franchises.
We also provide expert opinions on intellectual property, economic and commercial damages, and related matters.
Anderson Economic Group consultants have pioneered advanced techniques in strategy and business valuation. Our strategic valuation methods take into account asymmetric risks, real options, management flexibility, and other factors that are commonplace in today’s economy. AEG experts use a well-documented methodology that takes into account multiple important factors. This both enhances credibility and avoids the errors that often result from overreliance on accounting statements, simplistic cash-flow analyses, or industry standards.
The expertise of Anderson Economic Group consultants is demonstrated in the use of their advice in actual market transactions, strategic advice that has benefited our clients, successful resolution of disputes, and in published works.
Valuation & Strategy Services
Our valuation services include evaluating operating businesses, intangible property, franchisees, and intellectual property.
Business valuation for clients with a range of needs, including: due diligence and independent opinions, minority and majority share valuation, valuation for tax authorities, fairness opinions, ESOP annual reports, family-owned business valuations, and succession planning.
Anderson Economic Group consultants pioneered the use of strategic valuation tools that recognize critical elements of investment opportunities that are missed by standard discounted cash flow analyses. Strategic valuations take into account the real options available to many businesses and investors, such as the option to wait, to abandon a project, or to increase investments in the future. Strategic valuations also take into account the ability of firms to adjust to new conditions, and the costs and potential rewards of doing so. AEG consultants can use a variety of tools, including the patent-pending Rapid Recursive model developed by Supported Intelligence, LLC.
Determining the value of an intangible asset, such as intellectual property or franchise rights, requires expertise not only in finance, but also in industry analysis, economics, and competitive strategy. Intellectual property valued in this manner include patents, copyrights, and trademarks, trade dress, early-stage and newly developed products, and other intangible assets. Where necessary for use in forensic settings, AEG analyses refer to specific factors identified by courts in seminal patent infringement cases such as Panduit and Georgia Pacific.
Where tax authorities require a truly independent, expert valuation opinion, AEG can provide a level of expertise and credibility that can save valuable time and money. Because AEG does not provide accounting or auditing services, and specializes in valuation, its opinions are truly independent and are based on sound valuation methodology.
Our consultants have helped companies from Europe, Asia, and Latin America develop a strategy to enter the US market. We build a business strategy for our international clients on the same elements that are important to our American clients: keen understanding of the industry; assessment of local market conditions, customer locations, and logistic networks; awareness of critical cost factors and how they vary across the states and cities; and focus on customer demands, including brand elements and distribution channels. For more information visit our Market Entry Consulting page.
Our experts use data and methods appropriate for the task at hand. We approach each engagement by looking at the market, economic conditions, management and other factors, as well as the relevant financial statements. We avoid the use of black-box computer software, simplistic cash-flow models, and improperly-applied rules of thumb. Where advanced techniques are necessary, we use them properly. Where standard methods work well, we employ them while acknowledging their limitations and reliance on specific data. Often, we prepare a written report that summarizes the purpose, method, data, and conclusion of our analysis.
Customized Valuation Models
Anderson Economic Group experts pioneered strategic valuation techniques, and have been recognized as accredited consultants for the use and customization of Rapid Recursive® software developed by Supported Intelligence LLC. AEG experts can customize a recursive strategic valuation model for such business management decisions as:
Value of an investment opportunity, when real options or asymmetric risks are present
Value of an operating business, when management has the opportunity to increase or decrease investment in new product or marketing expenses
Rent, own, or option decisions
Franchise and franchisee valuation decisions
Legal and regulatory risk evaluations
Value of start-up companies
Value of technology investments subject to commercialization and other risks
Investment portfolio valuation where “black swan” risks exist
In many such cases, standard methods (including discounted cash flow and market-multiple methods) fail to properly account for the underlying structure and risks of investment and business opportunities, unless substantial subjective adjustments are applied. Properly structured, a customized recursive strategic valuation model can natively incorporate the underlying risks (including asymmetric and “black swan” risks) and management opportunities such as the exercise of “real options.”
Writing the Book on Strategic Valuation
Our experts literally wrote the book on strategy and business valuation. The Economics of Business Valuation: Toward a Value Functional Approach (Stanford University Press, 2013) brings to light an expanded valuation toolkit, consisting of nine well-defined valuation principles hailing from the fields of economics, finance, accounting, taxation, and management. It describes the path-breaking “recursive” or ‘value functional” method of valuation, which natively takes into account asymmetric risks, managerial flexibility, and real options. Other books by Anderson Economic Group experts include Applied Game Theory and Strategic Behavior (CRC Press, 2009) and Business Economics & Finance (CRC Press, 2004). These texts include real-world examples drawn from consulting clients of Anderson Economic Group.
Expert Testimony on Economic & Commercial Damages
When necessary, Anderson Economic Group experts provide Expert Testimony on these matters in courtroom proceedings, arbitrations, and in legislative and regulatory hearings. Please click here to read more.
AEG specializes in the estimation of commercial damages due to a variety of causes. Depending on the facts of the case, the appropriate measure of may be lost profits, diminished value, or some other measure. AEG uses the same methodology in its expert reports on commercial damages as it does in engagements not involving litigation. These methods include analysis of financial and operational records; industry and competitive analysis; discounted cash flow models; and sophisticated techniques such as real options or simulation modeling. AEG expert opinions have proven highly credible in courtroom and other forensic settings. They are based on clearly-described methodology, identified data sources, and adherence to recognized professional standards.
Franchisees and franchisors, and other companies that contract with each other to conduct business in a primary market area, can sustain damages if these contractual rights are not respected. AEG estimates damages in such cases using methods that recognize the unique nature of franchises and other agreements. AEG uses sophisticated Geographical Information Systems to quantify the lost sales revenue from customers residing in specific market areas. This type of analysis is essential in cases involving franchises in industries such as alcoholic beverage distribution, automobile dealerships, rental car agencies, and hospitality industry establishments such as hotels and restaurants.
Clients that have benefited from our Strategy and Business Valuation services include closely held firms, publicly traded corporations (including various Fortune 500 companies), state and local governments, and non-profit organizations (from trade associations to universities). Our experience includes markets throughout the continental United States, Alaska, Canada, Mexico, the Caribbean, China, and Turkey.
Anderson Economic Group Consultants are real people analyzing real world data.
We work one on one with you to identify unique challenges and apply industry expertise to solve your most complex business problems.