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Resources for Sound Business Decisions.™


The “Swiss-Army Knife” Business Valuation and M&A Dealmaking.

DealSense

®

DealSense is the all-in-one system for business valuation, pricing, financing, projecting and evaluating the economics of middle-market mergers and acquisitions including combinations, consolidations and rollups. Goes well beyond business valuation to address the specific needs of business buyers, transaction advisors and accountants—on both the sell-side and buy-side.

DealSense has been aptly called the Swiss-Army Knife of Financial Analysis, Business Valuation and Merger & Acquisition planning software.

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PRODUCT INFO: DEALSENSE AND THE ART OF M&A

The Art of M&A analysis is all about distilling and providing the essential financial information that gatekeepers and decision makers need in order to determine whether a given deal will move forward i n a timely fashion. It all comes down to a series of basic “Yes…!” or “No…” decisions, and if the answer is a “Yes…”, under what terms and conditions. The analysis needs to be rigorous, logical and include the essential data points the decision maker requires.

DealSense prepares a stem-to-stern quantitative analysis of mid-market M&A transactions and eliminates the headaches of spreadsheets. The process of analyzing a company, estimating value, structuring a transaction and evaluating ROI based upon detailed financial projections and discounting free cash flows is streamlined with DealSense. And with its onboard report builder, analysts can easily generate custom reports that meet the needs of gatekeepers and decision makers. With DealSense in a dealmaker’s toolbox, they can:

  • Save time while focus on the essential elements of the deal instead of hassling with spreadsheets.
  • Increase productivity by being able to handle multiple transaction opportunities without getting overwhelmed or sacrificing quality.
  • Respond quickly and negotiate from an informed position of strength to build value and minimize risk.
  • Update deal assumptions as they change in real-time and evaluate their impact on ROI and deal viability.
  • Inform gatekeepers and decision makers to facilitate closing the transaction.

What Are The Highlights of Power and Capability of DealSense?

Financial Data and Normalization Adjustments:

DealSense provides a smart way to prepare the Core Data used in the analysis, valuation/pricing and for putting together the elements of the deal. The Core Data is the set of historic financial statements (annual, interim and year/year) along with any adjustments to reflect the actual economic position and performance of the acquisition candidate.

Analysis of Financial Statement Data:

DealSense generates the business ratios and metrics you need to perform a rigorous analysis to measure the company’s current position, past performance and trends and how it compares to industry peers. This information will help to inform due diligence queries and negotiation approach as well provide a foundation for critical assumption that address future projections, deal price/terms and acquisition funding.

  • The analytics are applied to historic, normalized (recast) year-over-year financial statements as well post-transactions and consolidated financial projections.
  • Optional databases are available for business-to-industry benchmarking.
Comprehensive Projections—Pre- and Post-Deal Assumptions:

Financial projections are an essential part of acquisition analysis, pricing and planning. Glossing over this mission-critical planning element can be a serious mistake.

“When your valuations go awry, it is almost never because of the mistakes that you made on the discount rate and almost always because of errors in your estimates of cash flows (with growth, margins and reinvestment)” – Professor Aswath Damodaran

With DealSense you can produce two sets of fully-linked, detailed line-item financial statements (Income Statements, Balance Sheets, and Statements of Cash Flow) and related analysis.

  • The first set of projections is based upon current-ownership assumptions—the actual earnings stream you are buying. This is appropriate for valuation and pricing the business.
  • The second set of financials is generated using line-item operating assumptions of the Buyer along with deal elements and funding. The “buyer projections” are used to evaluate return on investment and post-deal sustainability.
Standards-Based Valuation Approaches and Methods:

DealSense includes professional-grade business valuation capabilities for buyers and sell-side advisors who want to perform a formal valuation (market value) for the entire business or a fractional interest. DealSense includes a wide selection of accepted and well-documented Valuation Methods that are available under the Income, Market and Asset Approaches to create an authoritative valuation report.

  • Business valuation professionals can prepare Business Appraisals and Calculation of Value reports that meet the needs of any business valuation assignment (Tax Matters, Litigation Support, and other business planning matters).
  • DealSense enables sell-side advisors and intermediaries to prepare a Market Price Studies to advise and educate their clients or prospective clients to make sure that the client’s price aspirations are aligned with marketplace realities.
  • Buyers can use the valuation to create a baseline to develop a pricing strategy and understand the spread between Market Value and the Price they are willing to pay. Buyers can also use DealSense and to prepare annual valuations of an acquired business interests or other companies in their portfolio.

The valuation section can be skipped completely, and you can proceed to the pricing, structuring and allocation elements of DealSense, if a valuation is not germane to your mandate.

A Better Way to Price, Structure and Allocate a Transaction

The Guideline Pricing and Allocation Tools are effectively a program within a program that provide a stepwise approach to putting a deal together. The analysis is driven from the first set of current-ownership projections—again, the actual benefit stream you are buying.

Purchase Price:

The process of setting an initial purchase price starts with eleven key assumptions for items related to cash flow, exit, and debt assumptions. These assumptions are applied to calculate a maximum price that will meet your investment hurdle rate based upon either a buy-hold or a buy-now-sell-later strategy. These two prices can be regarded as a bracket to work within.

You can play “what if…?” games by changing any combination of assumptions. A scorecard makes it easy to evaluate the impact of the pricing assumptions. Metrics include Firm-Level Cash Flows, Payback and IRR on Firm Cash Flows as well as dividends or distributions. Let’s call it a “deal-sensible” way to arrive at a proposed purchase price that meets or exceeds required ROI.

Price Allocation and Terms:

In one streamlined dashboard, you input transaction variables such as: such as non-compete agreements. (Allocation also works in an equity purchase.)

  • How purchase price (in an asset transaction) will be allocated between tangible and intangible assets and other items
  • How the purchase price will be paid to the seller(s): cash, notes, debt and assumed liabilities.
  • Transaction costs: fixed and variable.
    How the transaction will be funded: cash invested, debt and/or buyer equity.
  • Contingent compensation (earn-out) to the seller can also be included as part of the deal terms.

Built-in scorecards offer real-time feedback and the ability to test assumptions based a on both buy-hold or a buy-now-and-sell-later strategies. Metrics include IRR on Invested Cash Flows (Firm-Level) and Dividends (Distributions), spread over IRR hurdle rate, PV, NPV, payback and investment turns.

Robust Post-Transaction Forward-looking financial statements:

The first set of projections reflect assumptions of the current ownership. Now, this second set of projections, are based upon the buyer’s plans for the company and the resulting changes in revenues, expenses, capital structure and any assumed synergies.

Here you control all line-item assumptions for all income statement and balance sheet operating accounts including capital expenditures and asset disposals. The assumptions are combined with the price, form of acquisition, payment terms, allocation, and a variety of funding assumptions to prepare a second set of fully linked projected financial statements and cash flows (annual and monthly). A balance sheet at closing is also prepared based upon deal and funding terms and the allocation of purchase price.

The debt funding elements in DealSense can handle amortization, direct repayment, deferred and/or balloon payments with or without equity kickers/conversions. Equity instruments include multiple investment tranches, Preferred Equity and Convertible Preferred.

Return on Investment and Sustainability analysis:

The projected financial data provides the basis for further analysis of investment returns, payback and sustainability. This very granular analysis includes:

  • Return on Investment and Sustainability Analysis: The projected financial data provides the basis for further analysis of investment returns, payback and sustainability. This very granular analysis includes:
  • Changes in Working Capital for greater insight into this all-important metric.
  • Free Cash Flows for Invested Equity and Total Invested Capital.
  • Discounted Cash Flows are calculated at the Firm-Level as well as the Stakeholder- Individual Investor-Levels based upon assumed distributions.
  • When dealing with Stub Periods (less than a full year), DealSense will adjust the present value calculation for this irregular timing in order to arrive at an accurate Present Value of Cash Flows.
  • DealSense gives you the option for discounting Cash Flows using a buy-sell or buy-hold investment strategy. The buy-sell approach includes your assumed Exit Multiple and Exit Year.
  • Firm-Level returns are measured as follows: IRR on Invested Equity, Spread over Hurdle Rate, Present Value, Net Present Value, Profitability Index, Payback and Investment Turns.

DealSense includes a deep-dive analysis of the post-acquisition projections to help identify any systemic weaknesses and provide a reality check for complying with loan covenants. The analysis includes business ratios, common-sized statements and sustainable growth analysis.

Consolidated and Combined Financial Statements:

DealSense allows you to combine, adjust and consolidate the projected financial statements of a Parent and Target company after the acquisition, analyze the performance and capital structure before and after the consolidation and determine if the transaction will be accretive or dilutive to the Parent company in terms of Earnings per Share and Return on Investment. In addition, Free Cash Flows to Equity and to Invested Capital before and after the combination are compared to determine the amount of economic value that will be created.

Easily Create Custom Reports:

DealSense includes (without additional charges and upsells) an on-board report writer that streamlines the preparation of “number oriented” reports and proposals. Say good-bye to tedious cutting, pasting and link maintenance.

NUMBERS-BASED REPORTS FOR GATEKEEPERS AND DECISIONS MAKERS

Unless properly presented, gatekeepers and decision makers will find that a rigorous analysis is the equivalent of drinking from a firehose.

DealSense pulls together the elements of a rigorous stem-to-stern analysis and assembles them into actionable reports that can be edited and customized as needed to meet the needs of the key parties to the acquisition or sale of a company throughout the deal lifecycle. (Click on links below to see a sample report.)

  • Business appraisers and valuation professionals can prepare supportable and standards-based Business Valuations and Appraisal Reports and Calculation of Value Reports to support litigation, IRS tax matters, portfolio tracking, business financing and planning.
  • Sell-side Intermediaries, M&A Specialists and I-Bankers can prepare Market Price Studies to facilitate discussions on asking price and bottom-line price with a prospective seller prior to engagement and bringing the business to market. DealSense also generates Pitch-Books and Confidential Memoranda that include the numbers and information that prospective buyers need to evaluate their interest in a given deal situation.
  • Corporate Buyers, Acquirers and Private Equity can use DealSense to create Acquisitional Proposals to present the deal to the board of directors, the management team, and funding sources. The Acquisition Proposal combines the business narrative along with the analytics, the purchase price package, funding terms, post-deal operating assumptions and projected financials and cash flows for presentation to gatekeepers to obtain necessary approvals and authorizations. DealSense also generates a Business Combination Report that provides an economic analysis mergers, consolidations and roll-ups.

With the embedded business theory and analytical horsepower of DealSense, deal analysis and planning will be more manageable and productive. This workhorse will help you reduce stress and the pressures that accompany evaluating and buying a business. You will get a superior analysis and the time you save can be better used to focus on strategy and value creation.

Take your M&A analysis to the next level today with DealSense!

DEALSENSE SCREENSHOTS

Complete system helps business buyers, sellers and intermediaries handle more deal opportunities in less time
Import financials from Excel or CSV to save data entry time and effort
Set parameters for historic and projected financial statements
Detailed financials and recast adjustments
Ratios, comparison to industry norms, and other analytics help you assess performance and position
DealSense Includes the complete Business Valuation Specialist program. Perform comprehensive valuations using the Market, Income and Asset Approaches
Import market transaction data from DealStats, Done Deals and BIZCOMPS. Enter data from other sources and for Guideline Public Companies
Control panels let you easily set assumptions to create detailed, pre-acquistion projections for DCF and DFE valuation methods
Produce short-form Market Price Study aka Broker Price Opinion reports for the most likely selling price of a company's assets
Prepares completely customizablbe CIMs or Deal Pitchbooks to present the selling company to potential buyers. You control the items to include
Guideline Pricing Tool helps develop a threshold price range and educate all parties involved about price
Price Allocation and Terms Dashboard lets you structure transactions from one single screen
Debt funding via senior debt, Mezzanine with equity kickers and seller financing
Flexible equity funding options
Control all aspects of post-deal projections including synergies and assumptions under new management
Income Tax Worksheet gives you complete control over post-deal income tax projections to handle any tax situation
Easily make assumptions for capital expenditures and depreciation after the deal
Estimate ROI for up to 10 different equity investment groups along with converted debt, converted preferred and exercised options
ROI, IRR, and NPV based on post-deal free cash flows helps buyers determine if the deal meets their hurdle rate threshold

ADDITIONAL INFO: DEALSENSE

Financial Data and Normalization Adjustments:

Financial statement data is necessary in order to analyze the current performance of the business and how that compares to past performance and its industry peers. Prior revenues, expenses and earnings provide a baseline for estimating future earnings and cash flows.

  • The system can accommodates up to 10 years of detailed historic Income Statement and Balance Sheet data and supporting information as well trailing twelve months financials for up to 5 years.
  • Interim financial statements can be entered, adjusted and annualized. You have the option to use Interim Balance Sheet data in the valuation methods. This gives you the flexibility to use either the Interim or Year-End data depending upon which one is most appropriate given the valuation assignment.
  • Statements of Cash Flows, Sources & Uses of Funds are calculated automatically.
  • Free Cash Flows (aka Net Cash Flows), EBITDA, and other benefit streams are constructed from both year-end and trailing twelve month financials.
  • Use the Import Financials tool to import from Excel or enter financials directly into DealSense.

With DealSense you can adjust any line-item in the historic income statement and balance sheet for any year. The purpose of recast/normalization adjustments is to more accurately reflect the true economic benefits being valued. Financial statement adjustments are typically made to reflect items such as:

  • The normalization of officer salary to market and to eliminate discretionary expenses.
  • Non-recurring and accounting items.
  • Non-operating assets and liabilities as well as excess or deficient assets.
  • Income and expenses related to non-operating items.
  • The tax impact of normalization adjustments on historic benefit streams.

Explanatory notes can be added to document adjustments. Adjustments are presented both one year at time and for all years at once. DealSense then prepares a set of Recast/Normalized Financial Statements including: Income Statements and Balance Sheets along with:

  • Summary of Earnings and Benefit Streams.
  • Equity Net Cash Flows (Free Cash Flows available to Equity).
  • Invested Capital Net Cash Flows (Free Cash Flows available to Total Invested Capital).
  • Option to tax-affect Net Cash Flows for Pass-Through Entities such as S-Corps andLLCs.

Analysis of the Core Financial Statement Data

A point of data by itself reveals very little information. However, when you have a point of data in relationship to other points of data over multiple time periods, a story begins to emerge.

DealSense gives you the information you need to analyze the historic and normalized statement data and compare the results for up to 5 years to industry peers using either RMA Annual Statement Studies or Integra 5-Year Industry Reports.

  • Common-Size Income Statements and Balance Sheets as well as 33 common financial ratios that measure liquidity, coverage, leverage and profitability are automatically calculated. Ratios and common-size statements are also prepared for trailing twelve month financials
  • Performance can be compared to the specific industry based on Risk Management Association's (RMA, formerly Robert Morris Associates) Annual Statement Studies format.
  • Performance can also be compared using Integra Information's 5-Year Industry Reports for common-size statements, 60 ratios and historic earnings growth. Z-Score Model measures the probability of the business becoming insolvent within the next 12 months. This widely used model helps assess economic viability.
  • Sustainable Growth Model measures the maximum growth rate of sales that is sustainable without depleting financial resources. This helps determine whether revenue growth assumptions are in line with profit margins, dividend payout, asset turnover and financial leverage assumptions.
  • DuPont Analysis disaggregates Return on Equity (ROE) into three parts: profitability (Return on Sales), asset turnover (Return on Assets) and financial leverage. DuPont Analysis helps you determine whether changes in ROE are being driven by sales margins, asset management or financial leverage.
  • The MoneySoft Five-Minute Diagnostic™ provides a snapshot of a company’s footing and highlights the factors that are driving or dragging its performance based upon financial statement data.
  • The optional databases available from MoneySoft for industry peer comparisons are RMA Annual Statement Studies and Integra 5-Year Industry Reports.

DealSense includes a powerful projection engine that creates two forecasts:

  • Pre-deal projections assume that current ownership and management is in place, and
  • Post-deal projections that incorporate the transaction structure, funding and any buyer synergies. The pre-acquisition projections help to estimate value and price. The post-deal projections are used to estimate ROI to investors.

DealSense uses these projections to:

  • Estimate value in the Discounted Cash Flow valuation method.
  • Perform a justification or “sanity check” of valuation conclusions.
  • Help set price expectations by developing a range of guideline purchase prices that is supported by the expected future cash flows.
  • Develop a purchase price package that is supportable by estimating ROI using the projected cash flows and the terms of the deal.
  • Calculate post-deal ratios measure expected performance after the transaction.
  • Determine if the business in compliance with loan covenants after the transaction.
  • Estimate ROI to investors after factoring in deal terms, funding and buyer synergies.
  • Consolidate the projections of the target company and the acquiring parent to determine if the transactions was accretive or dilutive.

Determine the Future Earnings and Dividend-Paying Capacity

The future earnings and dividend-paying capacity of a business are two of the elements required by Revenue Ruling 59-60. Further, the anticipated future performance of a business and the resulting benefit streams are a primary consideration of a buyer when contemplating the price they can or are willing to pay for a going concern. Projected financial statements are needed when using discounted cash flows or discounted future earnings under the Income Approach. In addition, projected financial information is necessary when using the "first projected year" benefit streams under some of the methods in the Market Approach.

The future earnings and dividend-paying capacity of a business are two of the elements required by Revenue Ruling 59-60. Further, the anticipated future performance of a business and the resulting benefit streams are a primary consideration of a buyer when contemplating the price they can or are willing to pay for a going concern. Projected financial statements are needed when using discounted cash flows or discounted future earnings under the Income Approach. In addition, projected financial information is necessary when using the "first projected year" benefit streams under some of the methods in the Market Approach.

In cases where management provides the projected income statements and accompanying balance sheets, it behooves the analyst to test the information for mathematical coherence and reasonableness. By preparing projections, an analyst can compare the results to management's projections and bring to light any issues that may require further action. Accepting management projections "right out of the box" is not a sound practice and an independent appraiser can’t rely solely upon management’s assumptions.

With the above in mind, DealSense allows you to prepare a comprehensive set of fully linked, line-item projections of the Income Statements, Balance Sheets, Statements of Cash Flows, Statements of Retained Earnings and Sources & Uses of Funds for up to 10 years. Projections can be prepared on a monthly basis for the first 2 years for pre-acquisition and the first 3 years for post-acquisition.

Revenue and Expense:

  • Income Statement projection options include regression trend-line, historic average growth, manual constant growth, historic percent of sales, variable growth rates, manual percent of sales, manual dollar value inputs, or create your own custom links within DealSense.
  • Line-item accounts can be added for new revenue and expense items.
  • The base projection amount for each Income Statement account can be adjusted as needed.

Taxes and Tax Adjustments:

  • Projected income taxes are estimated for C-Corporations based on corporate tax tables or effective tax rates.
  • A Tax Reconciliation Worksheet allows for application of adjustments to taxable income and credits to Federal, State, Local and other taxes.
  • Net Operating Loss carry-forward is automatically deducted as projected income permits.
  • Option to tax-affect Net Cash Flows for S-Corps, LLCs and other Pass-Through Entities.

Working Capital and Other Balance Sheet Assumptions:

  • Accounts Receivable, Inventory and Accounts Payable can be projected using historically calculated turnover ratios, manual turnover ratios or dollar amounts.
  • Other balance sheet accounts can be projected based upon historic growth, percentage of net sales, percentage of historic net sales, percentage growth, manual input or a custom link. Goodwill and other intangibles are amortized over any term.

Capital Expenditures:

  • The amount of Fixed Assets required to sustain revenue growth for each projected period is estimated based upon a selected turnover ratio. Most recent historic, average and industry (if available) ratios are provided for reference.
  • Asset purchases can be made for any projected period.
  • Fixed asset purchases can be financed, in whole or in part, during any projected year with changes to the projected financial statements calculated automatically.
  • Assets can be purchased and disposed of in any projected year.
  • The effect of asset purchases and disposals is automatically calculated along with depreciation using straight-line or accelerated methods.
  • Depreciation is calculated based upon the assumptions for method and useful life. Depreciation expense can be allocated between Cost of Goods Sold and G & A Expenses.

Capitalization and Future Funding:

  • Revolving lines of credit can be advanced and paid in each projected period.
  • Short-term and long-term notes are amortized with flexible payment options controlled by the user including normal amortization or direct reduction.
  • Repayment options include interest and principal deferrals and balloon payments that are applied automatically.
  • Common Dividends are calculated as a percent of net income and Preferred Dividends as a percent of the preferred stock balance, or enter dividends manually.

Reports and Projected Financial Information Includes:

  • Monthly income statements and balance sheets for the first 2 projected years (pre- acquisition) and first 3 projected years (post-acquisition), if this option is utilized. This feature is helpful when evaluating a highly cyclical or seasonal business and when funding sources require monthly projections.

For each of up to 10 projected years:

  • Income Statements, Balance Sheets and Statements of Cash Flows.
  • Statement of Retained Earnings.
  • Sources and Uses of Funds.
  • Summary of benefit streams.
  • Loan amortization tables.
  • Depreciation and fixed asset recap tables.

In addition to the projection options and reports mentioned above, DealSense provides a review of the projected data using DuPont Analysis, Z-Score and the Sustainable Growth Rate method for the post-acquisition projections.

Valuation: Scalable from simple to formal reports.

DealSense includes the methods and approaches necessary to prepare a supportable valuation. The valuation is scalable to fit your needs. Select the methods you want to use and choose the type of report you need. Reports range from and informal Market Price Study/Price Opinion or Calculation of Value, all the way to a formal Valuation Report that includes all of the elements required by Revenue Ruling 59-60, USPAP and AICPA’s Statement on Standards for Valuation Services No. 1 (SSVS1).

Valuation is examined from several perspectives using professionally accepted valuation methods and forms an intelligent framework for purchase price considerations. DealSense provides a thoughtful and logical guide through the valuation process in order to arrive at a supportable conclusion of value.

An accurate valuation is a key component of any deal. Whether you need to produce internal or informal evaluations/market studies or formal valuations, DealSense streamlines the process of reaching an intelligent conclusion of value and creating well- documented business appraisals or valuation reports — while guiding you around the potential traps and pitfalls baked into internal spreadsheets and older valuation software.

DealSense is a new breed of merger, acquisition and business valuation software. It’s used by business buyers, sellers, intermediaries, professional business valuators, CPAs, business advisors and educators who want a system that goes beyond a fill-in- the-blanks approach or superficial software packages.

The Value of Business Valuation Software

  • Increase your productivity and effectiveness.
  • Enable you to properly apply valuation theory.
  • Focus your attention on the judgment calls that form your conclusion of value.
  • Help you to effectively communicate the value conclusion to gatekeepers, clients or the appropriate value-authority such as the Internal Revenue Service, a Court or an administrative body.

The true value and potential of business valuation software is fourfold:

Business valuation software that merely takes in the numbers and then cranks out a value is outdated and doesn’t serve your true needs. Valuation software should be more than a so-called “fast and easy” way to crank out a number. (Fast, easy and unsound is worthless.)

That’s why we created the new DealSense—a new generation of merger, acquisition and business valuation software for practitioners and aspiring professionals who want:

  • A comprehensive business valuation software solution that doesn’t sacrifice on diligence and thoroughness.
  • To navigate around the “snags” that can undermine the credibility of a business valuation. This embedded intelligence is referred to as The ValuSense Advantage™.
  • To pinpoint their attention and focus on the key judgment points that form a supportable conclusion of value—instead of jockeying with spreadsheets or software that just doesn’t go the distance.

DealSense addresses the essential elements for business valuation:

  • The normalization of financial statements by adjusting for discretionary expenses, non-recurring and non-operating items and GAAP adjustments.
  • A rigorous analysis of the financial condition and performance of the business before and after normalization adjustments. This analysis can be compared to peer-industry data (RMA Annual Statement Studies and Integra 5-Year Industry Reports).
  • An analysis of the future earnings and dividend-paying capacity of the business based upon either management’s projections or projections prepared by the valuator. Balance Sheets, Statements of Cash Flows and free cash flows (both levered and debt-free) are generated along with the Income Statements for up to ten years.
  • The appropriate application of Asset, Income and Market valuation approaches to reach a conclusion of Enterprise-Level Equity and Shareholder-Level values.

DealSense goes beyond the adjusted values proffered by less sophisticated valuation software programs. With DealSense, you can:

  • Value Non-Voting Shares at the Enterprise Equity Level by applying a premium for Voting Shares. DealSense will calculate the Share Price for both Classes that add up to the Total Enterprise Equity Value.
  • Diluted Per Share Value for both Voting and any Non-Voting is also calculated to reflect convertible preferred along with the options and warrants that would be “in-the-money” based upon the initial Per Share Value(s).

ValuSense Advantage: DealSense Improves Productivity and Navigates Around the Hidden Traps.

The ValuSense Advantage is what separates DealSense from other valuation software alternatives. Customer feedback and research have been organized and adapted in DealSenset to help you avoid many of the problems hidden in spreadsheets and other software. Such common errors arise from:

  • Using market transaction data "right out of the box" and then applying the data incorrectly to reach an indicated value.
  • Applying different benefit streams in the methods under the Income Approach.
  • Not matching discount and capitalization rates to the selected benefit streams. An example would be applying a Net Cash Flow discount rate when using
    EBITDA in the Discounted Future Earnings method.
  • Inappropriately making adjustments to arrive at indicated equity values.
  • Arriving at a conclusion of value without first reconciling method-level indications of value on an apples-to-apples basis.
  • Using Enterprise-Level cash flows to justify a Minority Interest conclusion of value.

Import from Valuation Databases for Improved Productivity

Built-in productivity tools and integrated databases will save time which frees you to focus on important valuation issues instead of wrestling with data.

  • BIZCOMPS, Done Deals and DealStats are integrated to help you find market comparable transactions, automate analysis of selected data, and apply the data in the Market Approach valuation methods.
  • Also supports valuation methods using the following non-integrated data: IBA, Guideline Public Company, FactSet Mergerstat and a flexible, open format.
  • RMA and Integra databases are integrated to automate the benchmark comparisons to industry data.

Create Effective Appraisals and Business Valuation Reports and less detailed Calculation of Value and Market Price Study / Price Opinion reports

  • Reports are completely editable using Microsoft Word as appropriate and necessary for each valuation assignment.
  • There is no additional cost for DealSense’s on-board Report Builder. Why should you pay more for the ability to create an appraisal or valuation report based upon your analysis?

DealSense includes an on-board report writer that streamlines the preparation of supportable and well-documented appraisals and valuation reports that have the elements required by IRS Revenue Ruling 59-60, AICPA’s Statement on Standards for Valuation Services No. 1 (SSVS1), and USPAP. DealSense also prepares a shorter- form Calculation of Value report and a less formal Market Price Study / Price Opinion report.

DealSense leverages the included report writer to help Intermediaries and business brokers automate the preparation of Market Price Studies and Pitchbooks/CIM reports. These reports are fully customizable. You can modify them to include the elements your firm normally includes and then re-use your modified templates over and over again for each new engagement.

Market Price Study / Price Opinion:
  • Use the Market Price Study as a tool to secure engagements and to educate the seller about price and set price expectations.
  • This is short-form, informal report that presents an opinion of the probable price for a company’s assets as of a specific date.
  • Control panel lets you select which bundle of assets will be included in the price and which assets will not.
  • Opinion of probable selling price for assets can be single price or price range.
Pitchbook/CIM:
  • Use the Pitchbook/CIM to present the selling company to qualified buyers.
  • CIM control panel lets you specify the proposed form of sale (assets vs. equity), which tangible and intangible assets are available sale and whether the marketing approach will be a negotiated sale or an auction with a bid deadline.
  • Specify the seller’s motivation for selling.
  • Option to replace the company name with an ID number to protect the identity of the selling company.
  • Options to select what elements to include and exclude in the Pitchbook/CIM such as ratios, comparison to industry data, projections, asking price, etc.

DealSense provides a sensible way to price, structure and allocate an M&A transaction. The Guideline Pricing Tool and Price Allocation & Terms Dashboard are effectively a program within a program. The analysis is driven from the first set of current-ownership projections—the actual benefit stream a buyer is acquiring.

Purchase Price: The process of setting an initial purchase price starts with eleven key assumptions for items related to cash flow, exit, and debt. These assumptions are applied to calculate a maximum price that will meet your investment hurdle rate based upon either a buy- hold or a buy-now-sell-later strategy. These two prices can be regarded as a bracket to work within.

You can play “what if…?” games by changing any combination of assumptions. A scorecard makes it easy to evaluate the impact of the pricing assumptions. Metrics include Firm-Level Cash Flows, Payback and IRR on Firm Cash Flows as well as dividends or distributions. Let’s call it a “deal-sensible” way to arrive at a proposed purchase price that meets or exceeds required ROI.

Price Allocation and Terms: In one streamlined dashboard that is rich in information and detail, you can:

  • Allocate purchase price (in an asset transaction) between tangible and intangible assets and other items such as non-compete agreements. (Allocation also works in an equity purchase.)
  • Set how the purchase price will be paid to the seller(s): cash, notes, debt and assumed liabilities.
  • Set variable and fixed transaction costs.
  • Set how the transaction will be funded: cash invested, debt and/or buyer equity. Contingent compensation (earn- out) to the seller can also be included as part of the deal terms.

Built-in scorecards offer real-time feedback and the ability to test deal assumptions based on both buy-hold or buy-now and-sell-later strategies. Metrics include IRR on Invested Cash Flows (Firm-Level) and Dividends (Distributions), spread over IRR hurdle rate, PV, NPV, payback and investment turns.

The financial blueprint will determine future cash flows, returns and risk. DealSense can accommodate the following financing elements:

  • Seller financing
  • Senior and junior debt
  • Mezzanine
  • Equity (common, preferred and convertible preferred)

A variety of term-debt options are available to engineer a financial blueprint including: flexible payment periods, direct or normal amortization, interest and/or principal deferral periods, balloon payments and equity kickers. This provides the ability to fine-tune a financial blueprint tailored to the needs of a specific deal.

The Post-Deal Projections include all of the transaction terms and can include any synergies that that the buyer is anticipating. After the deal funding and operating assumptions have been entered, DealSense presents the Free Cash Flow returns on invested capital and equity along with other capital budgeting metrics

  • Present Value of Cash Flows and Internal Rate of Return are calculated for both Invested Capital Free Cash Flows and Equity Free Cash Flows.
  • Further, these measurements are presented for two scenarios: 1) buy-hold (annuity into perpetuity) and 2) buy-sell (specific exit assumptions).
  • Present Value calculations are based on the Cost of Capital and Weighted Average Cost of Capital based on all the transaction funding instruments.
  • IRR is also calculated based on dividends/distributions and proceeds at exit for up to 10 different equity investment groups.
  • Consolidated Free Cash Flows of the combined parent and target are used to determine if the transaction would be accretive or dilutive and whether or not the expected ROI exceeds the investment Hurdle Rate.

Business ratios, common-size percentages and measures of sustainability are calculated to identify any post-deal “hot spots” or loan covenant default risks. DealSense performs a complete analysis of the post-deal projections to help determine sustainability after the transactions. Analytics include:

  • Sustainable growth in revenues after the transaction is measured and re-measured for
    each projected.
  • Z-Score bankruptcy predictor is calculated for each projected year after the transaction.
  • DealSense determines if the company is in compliance with loan covenants such as maintaining a minimum cash balance, minimum current ratio or a maximum debt-to-equity ratio; and displays a notification if any covenant is in default in any projected year.
  • Ratios measuring liquidity, coverage, leverage and operating performance are presented for each projected year.
  • Common-size percentage statements.
  • Comparison of projections to the most recent historic financial balances and the balances at closing.

DealSense includes (without additional charges and upsells) an on-board report writer that streamlines the preparation of “number oriented” reports and proposals. Say good-bye to tedious cutting, pasting and link maintenance.

Reports are completely editable using Microsoft Word as appropriate and necessary for each assignment—not a one-size fits all or cookie-cutter solution. The existing library of Reports in DealSense includes:

These presentation-quality reports are in addition to the numerous schedules that are printable individually or in batches as well as exported to Excel for additional editing and formatting.

RMA ANNUAL STATEMENT STUDIES

RMA Annual Statement Studies™ is the leading, most current source of reliable performance statistics for small and medium-size businesses.

INTEGRA 5-YEAR INDUSTRY DATA REPORT

With this report you can obtain valuable intelligence about industry financial trends that may impact your performance by analyzing five years of historical financial statements, ratios and growth rates.

DONE DEALS

Completed Transactions is the most comprehensive database of completed mid-market merger and acquisition transactions. The database provides hard-to-find details on actual merger and acquisition transactions for private and public mid-market companies.

BIZCOMPS

BIZCOMPS is perfect for the business buyer or valuation analyst that needs comparable sales data on smaller business transactions. The average selling price of these businesses is approximately $257,000 per business.

Risk Free Offer

Install DealSense and put it through its paces.

If you can honestly say that our products do not save you time and perform exactly as we say they will, simply let us know within 30 days from the date of purchase and we will gladly issue a full refund. So, you have nothing to lose… Investing in DealSense before you invest in a business acquisition…is the best investment you can make.

Offer Expires: October 31, 2020

Try it now risk-free for $1,595 and save $700

You can immediately download MoneySoft DealSense. Installation is quick and easy. And, technical support is there to help you get up and running.

Your subscription to DealSense Plus also includes:

  • Access to FREE technical support.
  • Automatic access to all program improvements.
  • Report Writer included without additional charge.  Why should you pay more?

 

M&A Professionals and Business Buyers:  Increase your productivity, handle more transactions in less time, and shorten deal-cycles with the award-winning system specifically made for acquisition analysis, valuation and planning.  Subscribe to DealSense today!

 

One-Year Subscription: $1,595 Single-User License (Retail: $2,295)

Auto Renewals: $795 Annually

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