Valuations and business insights for business service providers

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Matters that add value

As a lawyer, civil-law notary, tax specialist or any other business service provider, you help your clients with their challenges. These clients are often companies or institutions, and their shareholders, directors/boards or supervisory boards. In addition to legal and fiscal aspects, financial and business challenges can play a crucial role.

In these cases, you can turn to an external, objective party for support. One capable of providing input that can serve as an objective foundation thanks to its expertise in finance and business economics. Experts with the right experience who understand the problems at hand as well as the positions of key stakeholders, the interests of the entrepreneur and the company as a whole.

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The following issues may arise:

1. Special situations / objective valuation In special situations, such as conflicts, there can be an explicit need for

an objective equity valuation to arrive at a workable solution. 2. Sale in challenging circumstances When results are under pressure, stakeholder relationships have become

complicated and company management is insecure and/or inexperienced, Kruger can help you maximise returns and minimise losses.

3. Objective business perspective There is a need for real and unbiased insight into how the different

parts of the company are performing and how they could perform. Now is the time for targeted, effective action. But at what cost and how can they be funded?

4. Insight (into value) in the event of bankruptcy As an appointed receiver or advisor, you wish insight into the business

economic aspects of the company, such as its business operations, its outlook and its value, in order to evaluate and compare bids.

5. Act on the Confirmation of Private Restructuring Plans Kruger is prepared for a pragmatic approach as soon as the new Dutch

law (WHOA) comes into force.

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Valuablerecommendations

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Kruger has three decades’ worth of experience in providing high-impact advice to companies looking to gain insight, become more effective and/or set out a new direction to deal with complex issues.

With years of hands-on experience in the Dutch mid-market and a history of analysing a wide variety of companies, Kruger often looks at companies and their (im)possibilities from a slightly different perspective than others.

Krugers relationships with companies and stakeholders are built on trust and open communication.

This results in honest, valuable, no-nonsense advice.

Kruger is active in: Business Consultancy Corporate FinanceInterim Management and Executive Search

Effe

ctive

thinking Effective action

Effective calculations

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Certification

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Quality is of paramount importance to Kruger.

Company ValuationsOur team includes two chartered accountants who are members of the Royal Dutch Professional body of auditors (NBA) with the required expertise and experience to carry out complex valuations.

Turnaround ManagementThe European Association of Certified Turnaround Professionals (EACTP) is a European trade association for turnaround professionals. Eleven of our professionals are EACTP-certified. EACTP only accepts members who have proven to have sufficient knowledge of and hands-on experience in turnaround situations.

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Special situations/ objective valuation

Business valuation in the context of an acquisition or saleIn any transaction, both the buyer and the seller will have certain expectations for the future, and both parties can assign considerably different values to the company. In the case of an acquisition or sale, Kruger will provide an independent, expert valuation, both from the seller’s and buyer’s perspective. A valuation can help substantiate the purchase price and the transaction conditions. On top of that:

For the seller: based on the findings, the seller may decide to optimise the value of the company first.For the buyer: valuations can help fine-tune the due-diligence process and focus negotiations.

In the following situations, there is a clear need for objective valuations:

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Shareholder disputesWhen a disagreement has led to a conflict between shareholders or partners, a buyout or sale could be a solution. In that case, the question is what the company and its shares are worth. What is the value of any minority interest? An objective valuation of equity interest will often contribute to a solution.

Fiscal issues (succession, asset transfer)Kruger also provides an independent expert opinion to help coordinate matters with the tax authorities. To help settle a dispute about a company’s value in case of a transfer of assets, the Dutch Company Succession Regulations (BOR) or to determine the value of a company that is part of an estate.

DivorceEmotions can run high during divorces, which can blur the perception of what a company is truly worth. Kruger can carry out an independent valuation to give unbiased insight for all parties involved.

Second opinionKruger can provide a second opinion from a critical, constructive perspective. We also provide solutions that bring parties closer together, which often leads to additional insights that contribute to consensus on valuation.

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Distressed M&ACompanies in financial difficulties are sometimes forced to sell business units.In situations where results are under severe pressure, stakeholder relationships have become complicated and management is insecure or inexperienced, maximum proceeds must be achieved under tight time constraints.

Sales in challengingcircumstances

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Companies, business units, and their assets can be sold through a share or asset transaction, whether or not in combination with debt restructuring and capital injection.

This process requires expertise with regard to: Establishing a clear transaction strategy, aimed at retaining value and taking stakeholder interests into account.Partial valuations to provide insight into the various factors that determine a company’s value, allowing the parties involved to take well-informed decisions and to fine-tune their focus during the process. Valuations can also help to substantiate a realistic, competitive price.Insight into risks, fiscal aspects and delivery formalities. Identifying and contacting prospective buyers, ideally retaining freedom of choice during the process.Providing relevant information, including realistic, substantiated financial information to support the transaction.

Effective approachKruger combines its experience in the field of corporate finance and restructuring. Our efficient, transparent approach, based on close cooperation with company’s management and the use of our extensive network, focuses on revenue optimisation and loss limitation in case of bankruptcy.

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Objective business perspective

All companies or institutions go through difficult times now and then, as they may not be making sufficient profit or struggle with on-going, structural losses, potentially jeopardising their continuity. In these situations, the board and shareholders have all types of questions, and your client’s Financial Restructuring & Recovery department may have already gotten involved.

The current plans can be disappointing, and possibly lacking a Plan B. Continuing as normal is not an option.

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Required insightThere is a need for real, objective insight into how the various parts of the company are performing and how they could perform. What is the root cause of the problem and which opportunities are remaining untouched? Where is the company making profit and where is it making losses? Now is the time for targeted, effective action. But what should be done, when should it be done, and how can it be funded?

Insight and action are the foundation for a healthy futureSeveral aspects are necessary to derive a pragmatic plan:

Market position and testing the level of professionalism and quality of the organisation and its management.Objective turnover, margin and cost predictions, translated into a realistic operating budget and clearliquidity and balance sheet forecasts. An investor memorandum, usable for various types of financiers and/or equity providers. That identifies opportunities and solutions that can help optimise results.Conclusions and recommendations to facilitate the decision-making process.

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Detailed analysis provides insight into valueKruger is regularly called upon to assist insolvency administrators or investors in the settlement process for a bankrupt business, which may include a restart, sale or an acquisition of activities.

Insight in the event of bankruptcy

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Kruger can carry out an independent valuation of the business activities or business units of a bankrupt entity. This valuation can be used to substantiate the value of the company’s assets and can help companies interested in acquiring the bankrupt entity make the decision to restart the company. In this phase, valuations provide insight into the valuable parts of the company, increasing the chance of a positive future and maximising its returns.

We can help insolvency administrators select, assess and approach potentially interested parties. After all, Kruger has an extensive network of companies, entrepreneurs, private equity parties and investors.

Our years of experience and financial expertise enable us to gain insight into the activities and cash flows before bankruptcy, in order to shed light on what caused the company to fail.

Turning to Kruger lets you rely on a party who will work with you to oversee the entire playing field from a business perspective.

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Kruger has a leading position in the field of corporate restructuring and is fully prepared when the Dutch Act on the Confirmation of Private Restructuring Plans (WAOA) comes into force.

Act on the Confirmation ofPrivate Restructuring Plans

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The envisaged Act on the Confirmation of Private Restructuring Plans for Bankruptcy Prevention is aimed at companies with profitable business activities that are in danger of becoming insolvent due to excessive debt. The purpose of this act is to reinforce these companies’ ability to reorganise and restructure. Valuation is a key part of the process.

As soon as the Act comes into force, the court can proceed to approve agreements for debt restructuring. This does require that the company or its business units to be valued first. It must be established whether creditors would be better off under the new Act than it would currently be the case.

Kruger can provide an expert opinion on the future outlook and value of a company in the event of imminent insolvency. This is based on our thorough analysis and ample experience in corporate restructuring in all conceivable business sectors.

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Methods of valuation

Determining value In principle, the economic value of a company is determined by its future cash flows. The valuation methods based primarily on these cash flows are the so-called Discounted Cash Flow and Adjusted Present Value methods. To arrive at a sound estimate of future cash flows, we need insight into:

Market and market position.Competitive position and benchmark.Customer focus, vision and strategy.Organisation, management and entrepreneurship.Forecasts for operating budget, balance sheet and liquidity.Sector-specific issues, such as work in progress, production results, or contribution by individual activities/branches.

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assessing valuation approach

providing information

information analysis

determining valuation method

processing special items

drafting reports

discussing reports

follow-up process

Kruger has ample experience with a wide

variety of business and sectors, which means our valuations

go deeper than the numbers alone

Comparison with other methodsThe outcome of the DCF/APV valuation is compared to the company’s value according to other valuation methods, such as its profitability value or ‘multiples’ (industry guidelines). This comparison creates a multi-dimensional insight into the value of the company and the market value of similar companies.

Advice After detailed analysis of the company, Kruger will be able to calculate the value, as well as give practical recommendations with regard to optimising company results and its financing structure.

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Why Kruger?

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What you can expect from Kruger:Kruger stand for 100% independent advisory and does not invest.More than 30 years of experience in providing high-impact support to medium-sized companies, helping them create value (again) in complex situations.Proven track record, largest consultancy agency in the Dutch restructuring mid-market.Expert team consisting of approx. 25 professionals; sufficient capacity for timely, objective, practical, no-nonsense advice.Keywords: corporate interest, objective, professional, confidential, committed, pragmatic, ‘about & with people’.Continuous communication, especially in the face of rapid developments.Direct access to extensive network of private equity and financiers.Kruger Corporate Finance offers support with mergers & acquisitions,financing & refinancing and valuations.If desired, Kruger Interim Management can act as an intermediary between the company and a large group of (interim) professionals.Kruger Executive Search will find the right board member/manager for your team.

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Why Kruger?

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How Kruger works:One of our partners is always closely involved in the process, bearing final responsibility. Our professionals bring decades of experience and the skills required to keep an eye on the bigger picture in crisis situations making the right economic decisions, without losing sight of the psychological and emotional factors that may be involved.Our analysis stands out from the crowd thanks to our thorough financial analysis. We present operating budgets along with liquidity and balance sheet forecasts, providing a full picture. These forecasts are a key component of our reports.If the available management information does not provide enough insight, we work together to provide real insight. For example: contribution margin per customer, cost price per product, better allocation of indirect costs. These cross-sections create new insights for future policy.Kruger always takes into account several scenarios, providing a quantitative explanation for all possible choices (invest, reorganise, cut costs, etc.).All our reports are practical and contain specific recommendations. You can count on us to be down to earth and to provide a thorough explanation in person.Quality is of paramount importance. Our team includes two chartered accountants who are members of the Royal Dutch Professional body of auditors (NBA) with the required expertise and experience to carry out complex valuations. On top of that, 11 of our professionals are EACTP-certified. The European Association of Certified Turnaround Professionals only accepts members who have demonstrated more than sufficient knowledge of and hands-on experience in turnaround situations.

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Krugerhas worked for

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Number of valuationsLast year, Kruger carried out approx. 40 valuations. In the majority of cases, Kruger was also involved in the underlying process that called for the valuation, such as a sale process.

SectorsKruger is active in virtually all sectors. As a result, we have sound knowledge of individual sectors, which means that our valuations are based on more than just the financial information of the company in question.

Wholesale 19%

Energy 1%

Business services 11%

Metal/ mechanical engineering 5%

Transport/ Logistics 6%

Retail 8%

Hotel, Catering &Leisure 6%

Automotive 2%Graphic 2%

Food (production) 2%

Healthcare 5%Non-profit 2%

Real Estate 1%

Agri 4%

ICT 3%

Industry 10%

Construction(related) 13%

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Our people

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+31 (0)10 21 21 922+31 (0)10 21 22 409office@kruger.eu kruger.eu

Postbus 86773009 AR RotterdamSteupelstraat 503065 JE Rotterdam

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