Why Business Owners Should Prepare to Sell Now.
Reason 1: Concentration of Wealth A typical business owner has 70-80% of their wealth tied up in their business. That’s a lot of eggs in one basket. On top of that, private businesses are less liquid and more risky than public stocks, bonds and real estate investments. Fortunately owners do have control over the value […]
Nine Warning Signs Your Buyer Can’t Close the Deal
The proof is in the pudding. It ain’t over ’til it’s over. Don’t count your chickens before they’ve hatched. Pick your cliché. Just because someone makes an offer to buy your business doesn’t mean they will close the deal. As a seller, you need to look at more than dollar signs on a purchase offer. […]
How are Discounts for Lack of Control Determined?
I recently penned a summary on valuation discounts for lack of marketability. As a follow-up, this post is about discounts for lack of control (DLOC) for the valuation of minority equity interests in operating businesses. In the business valuation context, control refers to the ability to manage or control a business. A controlling shareholder enjoys […]
Failing to Plan Your Exit is Planning to Fail
Ben Franklin is credited with saying, “If you fail to plan, you are planning to fail.” And Warren Buffet once said, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” Both of these sayings are great reminders for business owners looking to exit. For most business owners, their company […]
Opportunity Zones: a Compelling Tax-Advantaged Investment for Business Sellers
Cashing in on the sale of your business is the final reward for many years of dedication and hard work. Then your CPA tells you how much you will owe in taxes. It’s a shock, but there’s a relatively new reinvestment opportunity that may help trim your tax bill … In April 2018, The U.S. […]
Business Interruption 101
If you are reading this blog post from the Left Coast today, you know all too well the front page pictures and stories on the wildfires affecting Northern and Southern California in the past few weeks. The devastation is unimaginable. As I write this, the Kincade Fire in Sonoma County (just north of our Petaluma […]
California’s AB5 Law May Impact Small Business Values
Assembly Bill 5 (AB5), signed into law last month by governor Gavin Newsom, will impact the valuation of many small businesses in California that have grown to depend on independent contractors. For impacted owners intending to sell in the near term, this new law may require a change of plan. The new law, which goes into […]
Ten Factors that Affect the Cost of a Business Valuation
In the world of pricing, there are simple models (e.g. cost plus a profit markup) and complex models (e.g. dynamic pricing based on real time supply and demand algorithms ). If you have ever purchased an airline ticket online, you’ve seen how a complex model makes prices impossible to decipher. Fortunately, we can offer greater […]
Why business transactions don’t close: Signs of a flaky Buyer/Seller
Selling or buying a business is time consuming, emotional and stressful, and having a deal fall through can be demoralizing. But the reality is that only a fraction of potential business acquisitions actually close. Many deals never really get off the ground. Even deals that make it to the letter of intent (LOI) phase often […]
Understanding the Value of Intangible Assets
As a follow-up to our recent post on profiting from intangible assets in a business sale, this post introduces intangible asset valuation. As our last post outlined, “intangible assets are identifiable, non-physical in nature. They are something you can describe, document … and, most importantly, transfer.” Once identified, there are several ways to value intangible […]