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. Read more
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: Read more
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.” Read more
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? Read more
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. Read more
[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. Read more
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: Read more
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? Read more
Launching a business is hard work and there is certainly no requirement to attend business school or even pass a business owners 101 course to get off the ground. However, if you want to have staying power and run a successful business there are plenty of business basics that would be helpful to grasp. Here is a top 5 list:
We all know the old adages: “team work makes the dream work” and “many hands make light work”. However, sometimes in business we get caught up in our own numbers and our desire to grow that we forget the value that can be reaped when we share a little and partner with others. Everyone has their own strengths and rather than trying to bite off more than you can chew or focus resources on areas where you are not a subject matter expert, sometimes it pays to find Strategic Partnerships. These partnerships can add real value to your business and can be both formal or informal. The key is building and sustaining relationships that enable the collaboration to be greater than the sum of the parts. Read more
Quantive is a veteran owned and operated financial services firm. We work exclusively on matters related to corporate value: business valuation, value growth, and M&A advisory.
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