Strategic Audit & Valuation

The Tequity Strategic Audit and Valuation program is designed specifically for software, IT services, telecom, and technology companies that have reached a critical point in their development.  Key strategic decisions need to be made that will have a major impact on the future of the business.  

It allows the management team to objectively consider the position of the company and then select the optimum strategy, bearing in mind the need to maximize the return to shareholders through a liquidity event or exit.

Methodology

The program is not a major consulting exercise, but a concise, pragmatic method of determining the future of the company.  It is centered on an intense workshop session, and consists of the following steps:

Preparation

A Tequity advisor, who will participate in the project, will speak with key staff and review relevant company-provided materials and independent market data to prepare for the workshop.  As a result, each of the participants will have an appreciation of the company and its products/services, in addition to a good understanding of the market in which it is operating.

Market and Industry Information

Tequity will then use its own resources, market contacts, and access to on-line databases, to research the input for the workshop.  A presentation will be created which examines the implications of each of the strategic paths, assesses the viability of each in its market context and recommends the position to be taken.

Valuation

Tequity will undertake a detailed valuation of the company based on the most appropriate valuation approaches.  The valuation techniques used will include the following:

• comparison of price/sales and price/earnings ratios of quoted companies;
• comparison of price/sales and price/earnings ratios or recent private transactions;
• detailed discounted cash flow modeling.
  

The result will be a comprehensive valuation of the business as it is today, and what it could be in the future.

Workshop

The workshop, facilitated by Tequity, will include participation by staff, shareholders or representatives from the client company and Tequity's advisors.

The overall objectives of the workshop will be to explore the best way to realize value for the shareholders, and the most appropriate timing of an exit, taking into consideration the interaction of the following factors:

• overall objectives of the shareholders;
• financial performance;
• range of products and services;
• sales and marketing;
• development plans,
  

and cross referencing them against the following parameters:

• different types of exit route;
• market sentiment;
• market requirements for products and services;
• partnerships;
• competition;
• valuation enhancers;
• risk/reward factors;
• life cycles and timing;
• management resources.
  

The end result of this intense workshop session will be an evaluation of the viable strategic alternatives for the company, with a recommended route forward.

Report

A brief report will be submitted after the workshop, summarizing the audit and valuation, with specific corporate development recommendations.

Deliverables

The Strategic Audit provides a number of deliverables for the client:

• an understanding of the implications of different strategic paths in the market context;
• a comprehensive valuation of the business, and its potential;
• a recommended route forward;
• a brief report summarizing the Audit.

Timescale

This program typically requires two days involvement on the part of the management team/shareholders, and is normally carried out over a period of one month.

To find out more about Tequity's Strategic Audit and Valuation, contact James Pullen at 416.486.9400 x105 or info@tequityinc.com.