All posts in “Appraisals and Valuations”

Choosing a Business Valuation Firm

Most business owners perform a business appraisal only once or twice in the tenure of ownership of their company.  Oftentimes the reason driving the business appraisal – exit planning, tax considerations, litigation – suggests that the selection of a business appraisal expert is a critical one.

So with limited experience and great importance, how should the business owner select a business appraisal firm? Continue Reading…

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 steps and watch loan offers roll in.

1.  Improve your personal and business credit scores.

Continue Reading…

3 Secrets to Making Your Business More Sellable

One of the challenges that we often face is correlating value to “sellability.”  In many cases a business may have value to the owner, but there may be a very limited market for the company.  (In fact, this notion is the basis of the concept of a Discount for Marketability.) For example, a small  3-person company with a single working owner may generate significant value for the owner.  But that same business might not have significant conveyable value to a buyer. Continue Reading…

Understanding Valuation Adjustments

One common step in all business valuations is the “search for adjustments” – whether it be a public company with GAAP accounting or a small pass through entity.  Valuation analysts are (almost) always looking at past performance as a proxy for future value.  In doing so, we need to understand what the “real” earnings capacity of the company is.  Unfortunately, the story isn’t always so clear.  Myriad  factors cloud the question of “what’s real?”  Nonetheless, analysts work through a process to start quantifying these changes – or Adjustments – to earnings to realizing the real number.   From there, we can work through modeling performance, risk, and ultimately value.

Why do we care?  A few reasons: Continue Reading…

Beware of Valuation Rules of Thumb

Valuation Rules of Thumb are a common way to estimate the value of a business.  Their easy to comprehend and seemingly broadly apply.  But reader beware: at best, the represent an average.   And in real life there’s often no such thing as “average.” Continue Reading…

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…). Continue Reading…

The Unsolicited Offer: What to Do?

So you’ve received an offer to purchase your business.  Perhaps a competitor asks you to lunch and casually broaches the subject.  Or a vendor makes an overture to purchase your company.  Maybe a business broker calls and has a client that wants to make an offer to purchase your business.

As a valuation firm, we see this scenario all the time.  More often than not, we receive a call from the seller trying to figure out what to do. Continue Reading…

Top 5 Ways Your Marketing Efforts Can Drive Value in 2015

[Editors Note: We’re super happy to have Rachel Durkan with us  from  Paradigm Marketing.  She brings a unique perspective – as a marketing pro – to a subject near and dear to us: improving value. ]

Most business owners hope to grow their business and eventually sell it for a profit. This is no easy task, and even the most seasoned entrepreneur can face obstacles along the way. A comprehensive marketing strategy is just one piece of the whole, but it is crucial to business success. Continue Reading…

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A bad buy-sell agreement and an $11million mistake…

Speaking of expensive litigation, a New Jersey case might really drive home that point.  In the Estate of Cohen v. Booth Computers, on appeal the court ruled that a long-ago drafted buy-sell continued to be the controlling document.  It cost the plaintiff $11 million.

In the Cohen case, the buysell provided for a fixed valuation definition: Continue Reading…

Big Beer Acquisitions Strip the Craft out of Craft Breweries

CAUTION-This article may cause extreme thirst.

We like to keep a close eye on the beer industry, it interests us and keeps us from going thirsty. We find there are many business lessons to be learned through following the trends in both big beer and craft beer. The past couple of years have been very interesting to watch unfold as the boom of craft breweries continues, bringing triumphs and challenges for these start-ups, and we are seeing an emerging wave of acquisitions appear. How are these craft beer acquisitions changing the game and who is benefitting from these changes in ownership? Continue Reading…