EXECUTIVE SUMMARY The valuation range for Holloway Strachan & Reyes PLLC is $1,158,707 to $1,635,822, with a midpoint of $1,363,185. This range is derived from a triangulation of three valuation methods: Discounted Cash Flow (DCF), Market Multiples, and Asset-Based Valuation. The business's consistent revenue growth and diversified customer base contribute positively to its valuation, while moderate key person dependency and the nature of a minority ownership interest are factors that temper the valuation.

BUSINESS PROFILE & FINANCIAL HEALTH Holloway Strachan & Reyes PLLC demonstrates a solid financial profile with a revenue-to-expense ratio that supports a profitability margin of 34.6%. The Seller's Discretionary Earnings (SDE) margin is approximately 20.1%, which is competitive within the professional services industry. The business's steady revenue growth of 4.9% CAGR over the past three years indicates a healthy trajectory, aligning well with industry benchmarks for firms of similar size and scope.

VALUATION METHOD 1 — DCF ANALYSIS The DCF analysis values the business at $2,294,887, based on a 4.0% growth rate reflecting historical performance and industry expectations. A 20.0% discount rate accounts for company-specific risks, including a 3.0% key man risk and a 0.5% customer concentration risk. The terminal value of $1,062,479 was calculated using a perpetuity growth model, reflecting the business's potential for sustained cash flow generation.

VALUATION METHOD 2 — MARKET MULTIPLES The market multiples approach yields a valuation range of $593,600 to $1,001,700, using an SDE multiple range of 1.6x to 2.7x. The business's diversified customer base and consistent growth push it toward the higher end of this range, while moderate key person dependency necessitates a downward adjustment. This method reflects the market's view of similar businesses in the general business sector.

VALUATION METHOD 3 — ASSET-BASED The asset-based valuation totals $575,250, comprising $18,750 in tangible assets and $556,500 in goodwill, calculated as 1.5x SDE. While this method is less emphasized for service-oriented businesses, it provides a baseline value reflecting the tangible and intangible assets' worth.

INDUSTRY BENCHMARKS & COMPARISON Holloway Strachan & Reyes PLLC compares favorably to industry norms, with strong profitability and growth metrics. Typical risks in this sector include market saturation and economic cycles, while key value drivers are customer retention and operational efficiency. The firm's moderate key person dependency is a notable risk, but its diversified revenue stream is a significant strength.

GROWTH SCENARIOS The DCF growth scenarios project values from $2,133,689 (conservative) to $3,054,390 (optimistic). Achieving the optimistic scenario would require strategic initiatives to enhance growth, such as expanding service offerings or increasing market penetration, thereby boosting revenue growth beyond historical rates.

STRATEGIC RECOMMENDATIONS

• Reduce Key Person Dependency: Implement succession planning and cross-training to lower the moderate key person risk, potentially increasing valuation by 10-15%.
• Enhance Recurring Revenue: Increase the proportion of recurring revenue beyond the current 20% to stabilize cash flow and attract higher multiples.
• Operational Efficiency: Streamline operations to reduce expenses, aiming to improve the net profit margin by 5%, enhancing overall profitability.
• Customer Diversification: Further diversify the customer base to mitigate risks associated with economic cycles, potentially increasing valuation by 10-20%.

BUYER PROFILE (a) Likely buyer archetypes: Potential buyers include existing partners seeking to consolidate ownership, lateral partner teams from other firms looking for equity stakes, and private equity groups interested in professional services with stable cash flows. (b) Why each archetype would buy this specific business: Existing partners might value the $1,850,000 revenue and $371,000 SDE as a means to increase their stake in a stable, growing firm. Lateral partners may see the 18-year operating history and diversified customer base as a solid foundation for expansion. Private equity groups could be attracted by the firm's consistent growth and profitability margins. (c) Realistic buyer pool size: Moderate, given the geographic location in Texas and the professional services sector's specific requirements. (d) What buyers will scrutinize hardest: Buyers will focus on the moderate key person dependency, the sustainability of the 4.9% revenue growth, and the firm's ability to maintain its diversified customer base. (e) Deal structure & mechanics: This transaction involves a 25% partnership interest, typically structured as a multi-year payout from firm earnings or buyouts by remaining partners. Minority interests often trade at a 20-35% discount due to marketability and lack-of-control factors. The buyer pool is primarily restricted to existing partners and select pre-approved laterals, reflecting the nature of partnership interest transactions.