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Andrew Mackson, Co-Founder and Partner Assessing a company’s true value is vital to its success. Whether an organization wants to maintain taxation or financial reporting compliance, initiate M&A transactions, plan succession or resolve disputes, a comprehensive business valuation can help stakeholders determine its financial health and performance. InteleK, a boutique player in strategic, client-specific valuation and advisory services, generates value for its clients through custom valuation, timely and quick delivery, clear education and transparent pricing.
As valuation experts, InteleK considers three critical factors in its valuation process—growth, profitability and risk—to assess the value of a client’s business, specific to their situation, compliant with relevant laws and regulations, always assessing a range of applicable valuation methods. This enables the creation of accurate and defensible valuation reports that help businesses meet the needs of a mandated valuation purpose or assist with their strategic growth objectives.
“We are a holistic advisory firm helping companies across multiple sectors identify their true value using the most reliable valuation techniques,” says Andrew Mackson, co-founder and partner of InteleK. “Our valuation outcomes are intended to withstand intense outside scrutiny.”
All-Encompassing Valuation Services
Backed by a background in finance and wealth management, Mackson co-founded InteleK spotting a gap in the market for quality valuations of privately/closely held businesses domiciled in the U.S. and Australia.
Bringing their noteworthy credentials and expertise to the table across the InteleK team, they boast diverse backgrounds and experience to conduct specialized valuations for privately held businesses and their intermediaries—wealth advisors, attorneys, CPAs and auditors—across various industries in the U.S. and Australia.
InteleK’s valuation services are grouped under four categories: taxation & financial reporting compliance, litigation consulting, transactions, and strategic and internal planning.
Companies frequently need to conduct business valuations for multiple compliance-related requirements, including gift & estate tax and 409A requirements. This is especially true for tech companies that are often characterized by rapid growth and limited initial capital. For them, stock options serve as a fundamental tool for incentivizing and retaining key employees.
Under Section 409A of the Internal Revenue Code (IRC), companies must adhere to strict compliance requirements to ensure these stock options are granted at or above fair market value (FMV). When determining the FMV of the common stock of a company, many key considerations come into play to ensure the reliability, defensibility, and accuracy of that valuation.
Tech companies, in particular, often incorrectly use the valuation of their last funding round to establish the FMV required by IRC Section 409A. This can be problematic because the valuation from a funding round often ref lects an investment value, not FMV. Investment value often tends to be higher than FMV, especially in early-stage companies. This can be due to the presence of related parties and/ or strategic investors when raising capital, resulting in an investment value.
For example, a startup may attract the attention of an industry giant that wants to invest in the company to maintain the option of potentially acquiring the company later, if their business plan is proven successful.
To avoid these situations, the InteleK team takes a step-by-step approach to a business valuation. It follows a rigorous client engagement methodology rooted in three factors—income, market and asset-based approaches to valuation—customized to specific scenarios relevant to the subject company, business types, industry verticals, and the intended use of the valuation.
The income approach focuses on projecting future cash f lows or profitability, adjusting for risk factors, and discounting them to present value. For high-growth tech companies, this often entails complex modelling and scenario analysis.
Through the market approach, the team draws a comparative study with the client’s industry peers while using multiples or ratios from comparable transactions of either publicly traded or privately transacted companies. For privately held tech companies, this may involve examining the valuation metrics of similar high-growth firms.
Likewise, the asset-based approach calculates business valuation by adding the values of individual assets and liabilities. This method is less common for tech companies, as their assets are often intangible, like intellectual property, employee skills and trade secrets that are not readily listed on balance sheets or commercial to accurately value.
Our Valuations Also Serve As A ‘Business Health Check,’ Helping Business Owners Monitor Progress And Make Informed Decisions Regarding Their Strategic And Internal Planning Objectives
Knowing that there isn’t a specific number but rather, a reasonable range of the FMV of a company, the InteleK team often applies a similar weight to each approach deemed relevant to value the subject company for developing the most defensible and accurate numbers.
A notable instance highlighting the significant difference between investment and fair market value is when InteleK was engaged by a U.S.-based tech company. The client already had a valuation performed for IRC 409A purposes, which incorrectly used the last round of funding which determined an investment value rather than a FMV, pegging the company’s worth at around $100 million.
When InteleK performed the valuation, the FMV turned out to be approximately $10 million, significantly lower than the previous number. This accurate valuation had substantial implications for the company’s various stakeholders.
Depending on the previous valuation, a co-founder of the tech company, with a 25 percent stake in the company, was planning to gift some of their shares as part of estate planning to minimize their tax exposure.
InteleK’s valuation brought the co-founder’s assets well below the $12 million threshold for estate tax liability. This allowed the company to take corrective measures while saving the co-founder from unfairly spending millions on gift and estate tax.
InteleK’s state-of-the-art valuation services also prove to be beneficial for companies engaging in mergers and acquisitions.
“Our valuations also serve as a ‘business health check,’ helping business owners monitor progress and make informed decisions regarding their strategic and internal planning objectives,” says Mackson.
This extends to exit planning, where business owners must identify potential opportunities and choose the most suitable path, whether it’s selling to a strategic player, selling or giving shares to children/beneficiaries, implementing an Employee Stock Ownership Plan (ESOP), or other arrangements.
Raising the Bar on Education, Communication and Client Service
InteleK maintains personalized interactions with clients throughout their valuation engagements, from the initial scoping call, through to the closing call. The team is well aware of how big numbers and the valuation of clients’ key asset(s) can often carry material, emotional and mental consequences for clients. This is why InteleK educates clients about their independent valuation process objectively and empathetically throughout each engagement, ensuring clients have a comprehensive report and insights to navigate through the data and providing guidance on how to best utilize their valuation.
“We educate business owners and their advisors about the valuation process and its key drivers so that clients can optimally achieve their goals.”
A Nexus of Human and Artificial Intelligence
Apart from its state-of-the-art approach to business valuations, InteleK is distinguished by a blend of human intelligence and tech-driven advancements that form the core of its services.
The company maintains a team of highly trained professionals who leverage technology to minimize errors and improve the quality of the valuation process. Integrating technology also makes room for faster execution of valuations, without cutting corners on reliability and accuracy.
The perfect amalgamation of authentic valuations, transparent communication, and technological proficiency has helped many clients minimize their exposure to risks and facilitate informed decision-making both for business management and ownership.
InteleK’s unwavering commitment to assisting clients in delivering timely and reliable valuation reports positions it as a formidable force in business valuations and advisory services industry.
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Company
InteleK
Management
Andrew Mackson, Co-Founder and Partner
Description
InteleK is a business valuations and advisory firm that excels in providing precise and dependable appraisals. Its acumen for meticulousness enables Intelek to cater to clients and their intermediaries— financial and wealth advisors, attorneys, CPAs, and auditors—in different sectors, including construction, technology, and start-ups (pre- and post-revenue) across the U.S. and Australia
