Demand for succession planning services is booming, thanks to aging baby-boomer business owners preparing for retirement.

As a result, financial consulting firm The McKelvey Group (TMG), based in Gaithersburg, Md., is reporting a spike in demand for its business valuation services.

TMG valuation expert Will Unger said that over 20 percent of the firm’s business valuations were due to increased demand for merger and acquisition succession planning services.

TMG provides expertise in performing a wide range of formal business valuations for small and mid-sized businesses in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). Valuations include Employee Stock Option Plans (ESOPs), stock options, acquisition/sale, shareholder transactions, strategic planning and fairness opinions.

According to TMG, many organizations typically seek a valuation for their organization only when they are on the cusp of succession planning, such as a pending sale or acquisition. Instead, TMG advises a proactive strategy by preparing a valuation ahead of a merger or acquisition. By proactively preparing a valuation, the company can better determine which activities and investments will play a leading role in its future.

TMG’s valuation looks at:

  • if there is a strong management team in place;
  • whether the organization’s industry is on the upswing, downswing or in consolidation;
  • historical and forecasted company financials;
  • the company’s competitive position, based on whether demand for its products or services are on the rise or on the wane;
  • types of contracts; and
  • quality/differentiation of the employee base.

Matt McKelvey, president of the eponymous company he founded 15 years ago, said that his firm’s valuation practice continues to be a growing, evolving segment of its core business.

“Regardless of the industry, it is important for owners and managers to consider the value of their company well in advance of a critical event, such as a sale or exit,” McKelvey said. “Understanding the drivers of value in advance provides the company the time to mitigate valuation weaknesses, while encouraging valuation strengths. This proactive work can dramatically increase the value, and likely sale price, of the company.”