Trucking Company - a Valuation Case Study
Disclaimer:
The following case study includes a fictitious company name and altered ownership details for privacy protection. Any resemblance to real companies or individuals is purely coincidental. The names, facts, and figures used in this case study have been changed to preserve confidentiality. This document is designed for educational and illustrative purposes only.
BizWorth's thorough and professional approach to our company's valuation provided us with invaluable insights. The estimated fair market value of Valley Freightways will play a pivotal role in our strategic decision-making as we explore potential opportunities for our business.
BizWorth, a leading valuation firm, was engaged to perform a valuation of Valley Freightways to assist the shareholders of Valley Freightways in evaluating the potential sale of 100% equity interest in the company. This case study presents the valuation process, methods used, and the resulting estimated fair market value of Valley Freightways.
Nature & History of Company
Valley Freightways is a distinguished trucking services company with a specialization in long-haul transportation and logistics. It extends its services to a diverse clientele, encompassing both commercial and residential customers. The company was officially incorporated on January 15, 1990, as an S-Corporation in California, with its corporate headquarters situated in Fresno, California.
As of the valuation date, Valley Freightways boasted several significant strengths. These included a meticulously maintained fleet, a workforce renowned for its dedication and experience, and a robust and diversified customer base. These attributes were instrumental in underpinning the company's revenue stream and its commitment to delivering exceptional service. However, it is noteworthy that the company was exposed to the unpredictable nature of fuel costs, a factor that had the potential to impact its profitability.
Financial Analysis
Over the span of the review period, Valley Freightways' revenue exhibited a consistent and noteworthy upward trajectory. The company's revenue surged from $8,253,420 in 2018 to $11,795,689 in 2022, reflecting a steady and sustainable growth pattern.
Valuation Methodology
In the endeavor to determine the fair market value of Valley Freightways, BizWorth explored a range of valuation approaches. Ultimately, the Market Approach, specifically the Comparable Private Transaction Method, was granted precedence.
The Comparable Private Transaction Method was chosen due to its reliance on comparable private transactions, which provided a solid foundation for deriving appropriate multiples, thereby substantiating the company's value. Through this method, the value of Valley Freightways was determined to be $3,287,000.
Conversely, while the Income Approach was considered in the valuation process, it was assigned a lesser degree of reliance. This approach, based on the multi-stage growth method, was approached with caution due to concerns regarding the comprehensive inclusion of necessary adjustments required to accurately capture the company's ongoing earning potential. The value arrived at through this method amounted to $2,045,000.
The Asset Approach, on the other hand, was considered less relevant in this specific context. The Market and Income Approaches were deemed to provide a more holistic insight into the valuation of the company.
It is imperative to highlight that, in light of the unique context and specifics of this engagement, no discounts for lack of control or lack of marketability were incorporated into the valuation of 100% equity interest in Valley Freightways.
Ownership and Key Personnel
As of the valuation date, Valley Freightways was formally registered as an S-Corporation in California. It boasts three company shareholders, with ownership distribution as follows:
- Mr. David Mitchell: 51%
- Ms. Rachel Turner: 30%
- Mr. Michael Baker: 19%
The management team is a robust ensemble comprising key personnel, including the President, Vice President, and Director of Operations.
Services and Customers
Valley Freightways stands out as a provider of trucking services that cater to the demands of long-haul transportation and logistics. A diverse and well-maintained fleet, coupled with a dedicated team of drivers, facilitates the company's mission of satisfying customer needs.
Competition
Valley Freightways' primary contender is identified as Central Transport. The distinguishing feature in Valley Freightways' approach lies in its unwavering commitment to reliable service and a competitive pricing model.
Facilities and Properties
The company leases office premises located at 2001 S West Ave in Fresno, California. These office spaces are leased from a third party.
Customer Testimonial
Working with BizWorth was an invaluable experience for us. Their comprehensive valuation allowed us to gain a deeper understanding of our business's worth and potential. This knowledge has been instrumental in our decision-making process as we consider various opportunities for the future.
Conclusion
BizWorth's meticulous valuation of Valley Freightways, anchored in the Comparable Private Transaction Method, has resulted in an estimated fair market value of $3,287,000 for 100% equity interest in the company as of December 31, 2022. This valuation is a vital resource for the shareholders of Valley Freightways as they contemplate prospective sales or investment opportunities. It is an invaluable tool in their strategic decision-making process.
Working with BizWorth
At BizWorth, we specialize in providing comprehensive valuation reports tailored to the unique needs of businesses. Whether you require machinery and equipment appraisal, quality of earnings reports, or detailed valuation assessments, we have the solutions to help you make informed decisions and gain a competitive edge in the dynamic landscape of business valuation.
BizWorth is your trusted partner in navigating the complexities of business valuation. Our team comprises certified business appraisers, capable of delivering the comprehensive reports your business needs. We've streamlined the process, making it accessible and cost-effective for business owners and their advisors to order reports online. To explore the right reports for your business and obtain pricing, visit BizWorth at bizworth.com. Let us be your companion on the journey to harnessing the power of valuation.
