Multiple Arbitrage

Understanding Your Exit

We often work with entrepreneurs that are not ready to or can’t exit their business just yet. Oftentimes, the reason that the time isn’t right for an exit is obvious: the valuation isn’t enough. This beg’s the obvious question: if value isn’t high enough now, what are you going to do to get it there?

Many owner’s make the assumption that value will increase over time. This is a false assumption: the passage of time does not correlate to increased value. It may, but as you well know, time also increases exposure to ongoing risks of owning a business. To be successful, smart entreprenuers use one common technique: they create an inflection point.

If value in your current business isn’t high enough to exit now, create value to get there. Read more

Got an M&A Situation?-How to Escape The Friendzone

A common scenario that we encounter in the business world is that there is an owner who’s received an expression of interest from a peer or a competitor. Oftentimes, this is someone that they have known and associated with for years. The scenario goes something like this, “We got to talking about it and the transaction just makes a ton of sense. They have X, and we have Y, and together it’s a no brainer.” Read more

Diversify your suppliers (or risk developing a beer can dependency)

Micro-brews are a favorite, not just as business valuation clients but for personal consumption as well. When you shop the aisles there seems to be an ever growing supply of uniquely bottled craft beer choices and lately I have noticed more and more canned varieties as well. Cans can be convenient: easy to take on the go, no worries of breakage, no beer opener necessary, etc…Well it seems the trend may be coming to an end. Read more

Shake Shack and Valuation Risk Factors

It wouldn’t be wrong to say that in the valuation world our number one goal is pricing risk.  Afterall, no matter how you look at it, valuation is essentially looking at the likelihood of achieving a particular return on investment.   Part of a valuation, then, is understanding Risk Factors that impact a business. Read more

In DIY Valuation News: The Internet Lies.

Every once in a while we’ll be chatting with someone about engaging on a valuation project and they decide to go the “DIY” route.  “We decided we’d do the valuation ourselves.”  How did they manage this?  Just like a diagnose all my health problems, of course.  They googled it. Read more

Mortgage Bubble Deja Vu: The Real Losers in Uber vs. Taxi Battle

Over the last year the battle has reached all new levels as Uber and Taxi medallion owners fight for control of the market. But as the courtroom battles center on words like “ehail” versus “street hail” and “metered rides” versus “surge pricing,” let’s take a deeper look at the unexpected party who really has the most to lose as we go through what has transpired thus far. Read more

I have an MBA … so I’ll just do my own valuation

So this is a fun call that we get from time to time.  Bob the Business Owner lobs in a call or an email inquiring about getting their business valued.  But after learning that its not – and I know this is a huge surprise – free, Bob responds “Well, I have an MBA so I’ll just do it myself.”

You probably know where this is going, right?

Please Listen: Bob, I would really like you to reconsider what you are saying here. Read more

Are Valuation Analysts Accountants in Disguise?

We are often asked if we are also accountants as traditionally, most people went to their local accountant for any business valuation requirements. And the answer is a resounding, no – we are not accountants, we do not do tax work, we do not perform audits. We leave that work up to the professionals and stick to our craft. This is essentially why a lot of our clients and key relationships in place are in fact with CPA firms and the trusted CPAs of our small and middle market business owners. Read more

I’m Done Writing About Stock Prices (After This)

This past week we wrote about how (if!) the stock price of a public company reflects future earnings.  This all came about from an article over on Medium written by a Harvard MBA student.  Lo and behold, a Harvard professor Ben Golub weighed in on a similar subject over on Quora.  I took exception to some of the students thinking, but Dr. Golub’s response I can get behind! Read more

Harvard MBA, a lesson on stock price and valuation

Medium is great, isn’t it?  All sorts of folks write all sorts of things.  Also, all sorts of folks write all sorts of things that I may or may not agree with.  All in all it’s a pretty healthy outlet!  But let’s take a dive down the rabbit hole on one in particular. Read more