Charities and social enterprises need valuations more often that you might think: not just when considering selling a trading operation, or arranging a joint venture, but also when licensing a brand or other intellectual property, or moving operations between different parts of a charitable group and needing to do at market value. Embracing both financial value and impact, a valuation supports a programme, business operation or asset by providing a solid rationale for commercial arrangements, confidence regarding how to achieve best value on disposals, partnering or investment opportunities, and a sound basis for decision-making. Valuation can help to focus attention on risk, helping to define a scope for due diligence or similar financial reviews.
The Sonnet team includes experts in conducting valuations for charities and social enterprises for a range of purposes. We understand what influences the value of a charity’s trading activity and how this might be different from other types of businesses. We understand how an organisation’s social impact might affect its value as a business, and how to balance financial value with other kinds of value such as the value attached to a brand or to intellectual property (IP).
We regularly undertake brand valuations within the context of charity partnerships such as licensing arrangements around a group or with external partners. We also regularly provide business valuations for organisations planning to sell or acquire trading operations, and can offer support advising on transaction negotiations and due diligence reviews. Valuations are really important for charities and social enterprises.
One of our many valuations was for Trinity College London during its acquisition of a business in Italy that was a key regional sales channel for language qualifications. Our valuation included a review of the cash flow and key risks relating to the business and the acquisition. We advised TCL on the valuation of the business under its current ownership, and the value after acquisition. This enabled TCL to assess a fair value to offer for the business without risking unduly limiting its return from the investment. We then advised on a risk-based due diligence exercise to review matters of significance in light of the valuation, and supported with negotiations to reflect those risks fairly within the deal structure. Pete Mobbs, Trinity’s CFO, observed when discussing a follow-on assignment with Sonnet that “…this approach proved invaluable in finding and negotiating the right deal whilst maintaining a relationship with the Italian organisation for the future. It also recognised that this wasn’t just about financial value, but also about impact and the effects on our wider mission. It informed our accounting and ongoing management whilst also giving our board the comfort they needed for signing off on the transaction.”.
To find out more or to see how we can help with valuations, please get in touch with c.theobald@sonnetimpact.co.uk.
