OUR STANDARDS

Advanced Business Valuations has certain self-imposed standards, which assist in insuring our commitment to high quality valuation opinions on a responsive basis for reasonable fees.

• Independence. Independence in our work is a primary objective. Since valuation opinions are often used to test the fairness of a financial transaction or to assist in assuring its fairness our independence is paramount. In order to maintain independence, Advanced Business Valuations does not accept compensation for valuation services on a contingency or percentage basis. Additionally, our business is highly diversified and no single client is responsible for a significant portion of our revenues.
  
  
• In-depth Analysis. Advanced Business Valuations' professionals possess a wealth of experience in the field of business valuation. We bring that experience to every assignment. Every client company is examined in-depth. Their financial statements are recast in our spreadsheet format. This in-depth analysis is necessary to provide our client with the highest quality and most complete appraisal possible. As specialists in the field of valuation, Advanced Business Valuations can quickly research, analyze and prepare a well-documented, logical, and comprehensive valuation report.
  
  
• Teamwork. Advanced Business Valuations looks forward to participating as team members with expert advisors such as lawyers, accountants, investment bankers and commercial bankers. The firm is fully accessible to other team members during the duration of the engagement. This team method of problem solving provides optimal results.
  
  
• Integrity. Advanced Business Valuations adheres to the ethical standards set by the ASA, NACVA and IBA. Our reports conform to the Uniform Standards of Professional Appraisal Practice, the Business Valuation Standards of the American Society of Appraisers and to the NACVA's report standards.
  
  
• Commitment. Advanced Business Valuations is committed to quality service, communication, and competence. We make the promise to each and every client to provide the highest quality product, timely and within the agreed upon budget. Because issues often arise years after an appraisal, we provide long-term assistance to our clients. Advanced Business Valuations will be here to provide support now or in the future.
  
  
• Reasonable. At Advanced Business Valuations, we believe in earning our fees. Fees for our services are essentially based on the time and experience required to carry out an assignment, as well as the anticipated use of the valuation opinion. Prior to commencing work, the scope, purpose, use, date of valuation, data requirements, fee and time frame are set forth in a signed engagement letter. In the case of litigation support services, agreed-upon hourly rates are charged. Due to Advanced Business Valuations specialized approach, research resources and expert professional staff, the firm can offer its valuation services for competitive and equitable fees.
  

FAIRNESS OPINIONS AND SOLVENCY OPINIONS

Closely held businesses often require the services of experts to properly navigate towards financial success in today's complex and competitive environment.

Valuations performed in anticipation of certain transactions and/or events are considered prudent. Corporate principals, directors and counsel should weigh the advantages of obtaining a professional, independent and objective valuation prepared by a specialist in valuation and financial opinions.

• Fairness Opinions. There are many reasons for fairness opinions, most of which deal with transactions involving securities of both closely held and publicly traded companies. A financial opinion may be required to assist in the redemption of securities, the exchange of cash and debt for securities, etc. An independent opinion of fairness relative to the exchange of values involved can provide substantial support for such exchanges. Furthermore, independent fairness opinions are useful as a defense against dissident shareholder claims.

ESTATE AND GIFT TAX PLANNING

Creating and preserving wealth forms the basis of family and estate planning. Proper planning should provide sufficient assets to maintain your family's lifestyle and assure distribution of assets to your heirs at minimal tax and administrative cost.

• Estate and Gift Taxes. To eliminate or minimize potential future problems with the Internal Revenue Service, it is extremely important to place an independent and objective value on non-cash interests.
  
  
• Estate Planning. An objective valuation of a privately held business included in an estate often serves as the cornerstone of a properly formulated estate plan.
  

ACQUISITIONS AND SALES

When it comes to corporate planning, it is crucial for business owners to know how much their stock or assets are worth. These values, as well as any anticipated changes, will materially affect operations and tax strategies. Many important assets do not even appear on a business' balance sheet and those that do appear are valued at historical costs rather than current worth. A valuation may be needed for any number of corporate planning scenarios such as:

• Mergers and Acquisitions. The buying and selling of a company is obviously a major decision. A valuation is an essential component in setting a fair market price, establishing negotiation parameters, structuring the transaction, and evaluating various tax implications to meet the needs of all parties.
  
  
• Public Offerings. Due diligence examinations, which include an objective third-party valuation, are extremely helpful in satisfying federal and state regulatory concerns regarding full and accurate disclosure and security pricing. An independent valuation also assists in establishing investor confidence and in providing a sound base for subsequent trading.
  
  
• Going Private. An independent determination of fair market value must generally be established for public entities wishing to acquire the shares of their minority stockholders.
  
  
• Leveraged Buyouts. An independent valuation is critical in establishing the terms and conditions of a leveraged buyout and in structuring the acquisition debt package.
  
  
• Purchase Price Allocations. In allocating the purchase price of a going concern to the various assets acquired, an independent valuation is essential in substantiating such allocations before the Internal Revenue Service. Advanced Business Valuations works closely with real estate, machinery and equipment, and other specialized appraisers to establish these values.
  
  
• Buy/Sell Agreements. A valuation will often assist business owners in avoiding future problems by establishing a standard of future value for stockholder/partner buyouts.

LITIGATION AND ARBITRATION

Our services can help you develop and present precise, objective evidence that clearly shows the merits of a legal position. We can serve as an expert witness and work closely with legal counsel in:

• Partnership Dissolution. An independent valuation can greatly simplify partnership negotiations during dissolution proceedings.
  
  
• Marital Dissolution. When either or both parties to a divorce have business interests, it is often necessary to establish the fair market value of such holdings in the process of determining an equitable division of assets. Expert testimony will often be required during the course of such proceedings.
  
  
• Compensatory Damages. An expert valuation of economic damages is of great assistance to legal counsel in cases where diminution of business value or lost profits is an issue. Such issues arise during breach of contract lawsuits, anti-trust violations, and other legal actions involving damages.
  
  
• Litigation. During the pretrial phase, an objective valuation analysis can substantially increase effectiveness in pre-trial planning, depositions, or settlement negotiations. During trial, the testimony of a valuation expert can greatly strengthen a case.
  
  
• Shareholder Disputes. It is not unusual for shareholders to have disputes that involve various financial and economic items. These can include everything from determining an amount that a departing shareholder is owed for their interest pursuant to an agreement, to determining amounts that were misappropriated.

FINANCING, SPECIALIZED AND RESTRICTED SECURITIES, REORGANIZATIONS AND RECAPITALIZATIONS

Obtaining funds for growth is frequently a challenge for most owner-operated businesses. Rates and terms of loans are dependent upon the value of the collateral that secures them. Increasingly, commercial lenders are looking to independent valuations to increase their comfort level regarding the worth of collateral and frequently to ascertain the going-concern value of the entire business. With the professionals on our team, you can be sure of receiving the valuation information in a format that will maximize its impact on your lenders decision-making process.

• Private Placements. A well-prepared private placement memorandum will often include an independent valuation to substantiate the value of the equity the private investors are to receive in exchange for their funds.
  
  
• Loan Collateral Analysis. On many occasions, the stock of privately owned companies will be tendered as debt collateral. In these circumstances, the lending institution may require an independent valuation of the shares pledged.
  
  
• Specialized Securities. In establishing the value of new corporate securities, such as junior stock, convertible debentures or equity-based incentives, an independent valuation will be of great benefit to all parties.
  
  
• Issuance of Employee Stock Options. Companies must recognize as compensation expense the fair market value of the options issued and the amount of compensation expense recognized must be estimated using certain standard option pricing models. We have significant expertise in the various models and can advise your company on the most appropriate model.
  
  
• Restricted Securities. Restrictions on the owner's rights to sell shares of a publicly held company generally require the recognition of a discount. Advanced Business Valuations can independently determine the value of restricted securities and prepare an opinion thereon.
  
  
• Bankruptcy Reorganizations. During bankruptcy proceedings, it is often necessary to establish independent valuations for divisions, subsidiaries or other components of an entity, assess capital adequacy or deficiencies, appraise viability of business segments, and evaluate the overall reorganization design. Due to Advanced Business Valuations depth of management experience, we can participate as a skilled and important member of the reorganization team.
  
  
• Recapitalizations. A thorough recapitalization study will include both an appraisal of the entity's total value and an allocation of that total value to its various equity components.

VALUATION STEPS AND PROCEDURES

The following is provided as an overview of Advanced Business Valuations' appraisal process. Each step in the process is necessary to ensure the highest degree of quality.

Introductory Phase

• The Company and Advanced Business Valuations are introduced, usually by referral from one of our existing clients or from one of the Company's professional advisors.
  
  
• Advanced Business Valuations provides its qualifications and requests sufficient financial and descriptive data from the Company for initial review. Telephone conversations and/or initial meeting clarify the scope and purpose of the valuation assignment.

Engagement Phase

• We develop an Engagement Letter which specifies the major elements of the valuation assignment, including the purpose, the "as of " date, the scope of the expected valuation report and opinion, the expected time requirements for completion, and the proposed arrangement for fees and expenses.
  
  
• The Company executes the Engagement Letter with our retainer and collects information outlined on Advanced Business Valuations' Information Checklist.

Valuation Phase

• Advanced Business Valuations receives information from the Company, as requested on the Information Checklist.
  
  
• Preliminary analysis of the Company is begun and appropriate industry background research is initiated.
  
  
• An on-site visit is scheduled with Company management. Normally, one or two analysts will visit with management at Company Headquarters in order to: 1) Review in detail the Company's background, financial position, operations and future prospects with appropriate management personnel, 2) Review appropriate corporate documents not normally exchanged by mail unless necessary, 3) Tour the operations, 4) Respond to questions from management.
  
  
• The financial and valuation analyses are completed and a draft report developed, which is sent to Company management for review. Our consultant will discuss the appraisal in draft form with management in order to assure factual correctness and to clarify any possible misunderstandings.
  
  
• The valuation report is finalized. It is then reproduced in sufficient number for the Company's distribution or documentation requirements.

PROPOSAL AND FEES

Advanced Business Valuations would be pleased to meet with interested parties to discuss potential valuation needs. There is no cost or obligation for such a meeting. Prior to commencing work, the scope, fee and time frame will be estimated and confirmed in an engagement letter.

Each project is assigned a completion date to insure the timely completion of work and delivery of the final report. Mutually agreed-upon hourly rates may be used for litigation support services and for expert testimony. Fees for services are essentially based on the time and expertise required to carry out an assignment and the anticipated use of the valuation opinion.

A retainer, payable at the time the client authorizes an engagement, is credited to the final billing due. Interim fees are billed to clients on a progress-billing basis. Out-of-pocket expenses are charged to the client at our cost. At the time a signed report is rendered, the remaining fees are summarized and become due. During the course of an engagement, timely progress reports are made to the client.

Advanced Business Valuations is committed to providing excellent response time and superior service to its clients and their counsel. The firm has often been called upon to prepare a critical valuation report or related analysis to meet an emergency deadline.

REFERENCES

Advanced Business Valuations would be pleased to provide prospective clients and/or their counsel with references from attorneys, accountants and bank officers whose clients have been served by the firm. References are also available from selected clients on request; however, the actual valuation report and all client information are held in the strictest confidence.