Mind the Gap: Using Valuation for Gap Analysis

Our clients use business valuations for many reasons. Litigation? Check. Underwriting? Yep. Shareholder Agreements? Absolutely. Although, one of the ways we love to see our clients engage our services (and quite frankly, we don’t see this reason enough) is for gap analysis. What Is Gap Analysis It sounds fancy, right? As a concept, gap analysis […]

You Probably Don’t Know the Actual Value of Your Company

[Updated for 2021] And not knowing your value is eventually going to cause problems.  Throughout thousands of client interactions, one statistic stands out above all others: entrepreneurs drastically overestimate the value of their company.   It’s not surprising, of course.  It falls right in line with human nature: we all think our house is perfect, no […]

What is working capital? Why negotiate a working capital adjustment in your purchase price?

When a buyer values a target company, the buyer’s valuation is based on the target company’s financial condition on a specific date.  In most instances, several months pass between that initial valuation date and the closing date, when the buyer acquires the target company.  Purchase price adjustments need to be negotiated to reflect changes in […]

Quantive’s Valuation Process and What to Expect [Updated for 2021]

We get it, it’s daunting. Especially if it’s your first time getting a business valuation. With a quick search on Google, you can probably figure out how to get one.  However, the even bigger question Google fails to answer is – What does the process look like?   Quantive answers this question by running a tight valuation process to ensure a high-quality result. We say this consistently: repeatable processes […]

The Effect of Cybersecurity on Enterprise Value [Updated August 2020]

August 2020 Update With the advent of a “small global pandemic” – and the near universal move to “Work From Home” environments- the impact of Cyber Security threats has dramatically increased.  Think “Cyber” was a risk to value previously?  A trend we’ve seen is that not only has the pace of due diligence slowed as […]

How Long is a Valuation Good For?

It’s a logical question from business owners: how long is a valuation good for? The short answer:  probably for about a year. The longer answer: it depends. Context is critical Business valuations are always completed for 1) a particular purpose and 2) at a specific point in time. While a valuation will take into account […]

How Shareholder Compensation Affects Value

Question:  What’s the going rate to hire a business owner these days?  Or put another way… how much should an owner-operator pay themselves? In some privately held companies that may be a question that is answered by the Board of Directors.  But in most privately held companies it’s a question answered by a single person: […]

Understanding Terms: Main Street vs. Middle Market

We often throw around the terms “middle market,” “lower middle market,” and “Main Street.”  These are pretty common terms in the finance, banking, and M&A world, but probably less so to most business owners and entrepreneurs.  For the sake of clarity we thought we’d dive in.   Defining Main Street vs. Middle Market It seems […]

Understanding Seller’s Discretionary Earnings

So you’ve heard someone throwing around the term “Seller’s Discretionary Earnings” and you find yourself thinking “my earnings aren’t discretionary at all.”  Let’s jump in and understand this oft-misunderstood term (which also, confusingly, goes by “Seller’s Discretionary Income,” SDE, and SDI…).

How To Get a Business Loan

Your small business is ready to grow and you need a loan to make it happen. Just like with a personal loan or a mortgage, you will want to shop around and find the best rate and terms to meet your needs. Being prepared will be key to expediting the process. Follow these four basic […]