BUSINESS APPRAISALS
The Beck Group assists clients by providing a forest products business appraisal service. Beck’s Business Appraisal service offers our clients the ability to determine the value of their forest products business – either its Fair Market Value as a Going Concern, or its liquidation value.
Regarding Fair Market Value as a Going Concern, we typically use several different approaches in determining the business value including the replacement cost approach, the income approach, and the market data approach. We also offer clients detailed insights – not available from a typical appraiser – into industry trends and factors specific to a certain region or business that affect valuation. We also maintain a database of sawmill transaction purchase prices.
CASE STUDIES
Mass Timber Manufacturing Acquisition Due Diligence—The Beck Group recently assisted a confidential client by completing a third-party appraisal of a mass timber manufacturing operation. Beck’s tasks included a site visit to assess the state of the equipment, a valuation of the business as a going concern, and recommendations about the operation’s strengths, weaknesses, and opportunities for improvement. Regarding the going concern valuation, Beck used an income approach (using revenue multiples and EBITDA multiples) and comparisons to benchmark companies.
The mass timber manufacturing supply chain is an area of Beck expertise based on nearly 10 years of involvement in the International Mass Timber Conference as presenters, International Mass Timber Report authors, and other project work similar to this one. The client will improve their competitive capacity in this fast-growing market segment.
Business Appraisal—A confidential forest products manufacturing client recently retained The Beck Group to provide a third-party valuation of a division within the company so that ownership shares could be transferred for that part of the client’s business. Accordingly, The Beck Group developed two separate going concern valuations: one for the entire company, and a second for the assets of the division whose ownership shares were to be transferred. In addition, to the raw numbers we provided our independent assessment of key factors affecting valuation such as timber supply, operational strengths and weaknesses, the management team, and the overall industry outlook.
With strong business valuation experience and first-class forest products industry knowledge, our business appraisals provide much deeper and more valuable insight than a valuation performed by an appraiser lacking industry-specific knowledge. The company’s owners are now in an informed position for valuing assets to be transferred.
Expert Witness—The Beck Group was retained as an expert witness to assess the value of a forest products manufacturing operation that had been destroyed by fire. Our staff used a combination of the revenue and EBITDA multiplier approaches to estimate the value of the business. That value was used to great advantage in a negotiation process with the company’s insurance provider.
In addition to the valuation approaches, Beck maintains a database of mill transaction prices that is useful in valuation projects. The client gained a much stronger negotiating position relative to the insurer.
Acquisition Due Diligence—The Beck Group assisted an investor interested in acquiring a wood products manufacturing complex that included a sawmill and plywood operation. Beck’s tasks included visiting the site to observe and evaluate the operations at work, developing a valuation of the business as a going concern (including evaluating the company’s projected income and earnings multiples based on historical financial performance relative to comparable publicly traded companies), comparing the competitive strengths and weaknesses of the operations, developing high-level estimates of capital investment that would likely be required following the acquisition, and providing commentary and analysis for potential lenders and investing partners.
Because of Beck’s expertise in forest products manufacturing operations, our client was able to develop an acquisition bid based on accurate data developed by a neutral third party.
Mass Timber Business Plan Assessment—The Beck Group reviewed and assessed the business plan for a new greenfield mass timber manufacturing complex in the Western U.S. The plant concept included production of cross-laminated timber (CLT) and glued laminated timber (Glulam). Beck’s tasks included critiquing key assumptions in the business plan including raw material supply, operating rates, schedules, productivity rates and operating costs; reviewing letters of support; evaluating key management personnel; competitive assessment of the planned facility; reviewing market assessments for Glulam and CLT; and estimating the likely value of the facility following construction and startup.
The Beck Group’s familiarity with forest products manufacturing feasibility studies, business plans, and the mass timber industry all came to bear in helping this client navigate the complex planning process involved in developing a new manufacturing business.
Sawmill Appraisal—Beck staff completed an update to an earlier appraisal for a confidential client that holds extensive cutting rights to associated timberlands. Values were established for the property, plant, and equipment, as well as for the operation’s value as a going concern. Both an orderly liquidation value and a forced liquidation or auction value were established for the property, plant and equipment. For the going concern valuation, the value of timber cutting rights was determined in addition to the value of the sawmill business. Both valuations were instrumental in arranging financing for the restart of an operation that had been idled for several years.
The Beck Group is frequently asked to complete appraisals of wood products manufacturing operations. We maintain an extensive database of historic actual transactions of wood products manufacturing businesses, which are useful in our valuation work. For this project, a subcontractor with extensive used equipment experience was engaged to assist in determining the property, plant, and equipment values.
Business Valuation—The Beck Group provided an assessment of value for a wood products manufacturing complex that included a sawmill and biomass power plant. Beck’s tasks included an on-site visit to observe the operation, review of historical production and financial records, interviews with key management personnel, and assessment of the operation’s competitive position. This enabled us to develop a going concern valuation of the company based on past financial performance and comparison with relevant publicly traded companies, future earnings potential, and comparison with a database of comparable sawmill transactions.
Beck’s knowledge of forest products manufacturing operations combined with our business valuation services allowed us to effectively and efficiently provide a third-party view of the client’s operations and business value.