The ReCourses Valuation Model (RVM) is a sophisticated financial tool to give interested parties a quantifiable, repeatable indication of the value they are creating based on the sum total of their management decisions.
The RVM is a proprietary method for establishing the value of a marketing firm. While valuation services are often coupled with ownership sharing plans, they are also useful for estate planning to ensure liquidity and the proper titling of assets, divorce settlements, creating an ESOP that will hold some or all of your company's shares, determining proportionate value in a buy/sell agreement, funding a buy/sell agreement with life insurance, or dissolving a firm. And some business owners want a valuation of their business just out of curiosity, to measure their progress from year to year in a tangible way and to see how an outsider would evaluate the firm (giving them time to make changes). Regardless of the reason, it can be a useful exercise in measuring what you are building beyond just salary and distributions.
The RVM uses a fixed multiplier that varies by type of firm (times compensation adjusted net profit), after recasting financial statements to conform to traditional EBITDA calculations. The result is averaged with a fixed percentage of your AGI (the inverse of the multiple). Both those results are adjusted mathematically based on a combination of 15 factors in 5 categories, applying the elements that are deemed to not be reflected in the financial statements:
Presence of Non-Competes
Level of Employee Turnover
Age of Accounts Receivable
Debt to Equity Ratio
Months of Cushion in Cash Equity
Number of Partners
Principal Days Taken Off
Principal Hours Worked Per Week
Age of Firm in Years
General Condition of the Industry
Proportionate Size of Clients
We then run a standard of deviation study to determine how previous years should be weighted and to determine if we can rely on the results. The resulting number in the RVM is a valuation that is defensible and reproducible over the years. In fact, you will receive the spreadsheet with the formulas and numbers intact for later reuse.
The RVM is the only valuation method developed specifically for marketing firms, and the methodology is used widely around the world. It's also one of the most accessible (i.e., understandable) valuation methods in use today.
That's the program in a nutshell. There's more on how we work together under our FAQ.
Duration. One to three weeks from receipt of requested materials.
Deliverable. Spreadsheet, PDF, recast financial data, and formulas.
Unlimited Remote Implementation. 1 month.
Participation Requirements. Principal/Finance gather materials for 1 hour. Finance gathers materials for 1 hour.
Cost. $3,000 fee.
Terms. Fee sent with materials.