Exit Strategies Insights

Industry insights, knowledge base and announcements for business owners and professional advisors

Business Valuation Insights

Understanding Discount Rates The Risk Free Rate – Part 1 of 5

One of the most important inputs surrounding the valuation of the business is the discount rate that is used in the analysis. This discount rate is the expected rate of return on the subject interest which in most cases is the equity in the value of an operating business. Most often in our practice, this equity is attached to a private business that is owner operated. Over the next few weeks, I will dig into …

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SBA Covers 3 Months of Payments on New Loans

As part of the Economic Aid Act that passed in December, the Small Business Administration will make borrowers’ payments for three months on new SBA 7(a) and 504 real estate and micro-loan programs. These incentives were available last summer under a stimulus program that expired in September 2020. Now the program has been revived and enhanced. The SBA will make the first three months of payments (principal and interest) on new loans approved between Feb. 1 and Sept. 30, 2021. To be clear, these payments …

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Six Benefits of Monitoring Company Value

Even if your business is not for sale, monitoring its market value can be incredibly helpful. This article describes six ways that understanding value over the life of a closely held business benefits shareholders, directors and managers. 1. Value Report Card Like financial statements, an annual independent business valuation is a type of report card on company health. CEO’s can use this report card to educate, align and focus executive teams on maximizing enterprise value. …

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Discover Exit Strategies’ New Checklist of COVID-Era Normalization Adjustments

For most of us, 2020 has been one of the most challenging years of our lives. The pandemic has affected business performance both negatively and positively, temporarily and structurally.  It will permanently reshape the global economy in several ways, most of which we are just beginning to understand. Change and uncertainty makes the job of valuing and appraising businesses and business assets more challenging. At the core of every business valuation analysis is the process …

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Ten Key Drivers of Company Value

In our current time of economic recession, social unrest and political partisanship, simple questions rarely have simple answers. For an owner operator of a small- to mid-size business, the question of business value in today’s market is increasingly difficult. It is at these times that the team here at Exit Strategies Group (ESGI) feels the need to simplify the process down to the basic premise of what drives value. In explaining value, ESGI default to …

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Gifting Window for 2020 May Be Closing

With a Global pandemic and prospects of a sustained recession with double digit unemployment coupled with West Coast wildfires and East Coast hurricanes, I would say that everyone in these United States is looking forward to ringing in the New Year on January 1st. But before the ball drops on a socially distanced crowd in Time Square, you should think about other changes that may occur as we put 2020 in our rear-view mirrors. Specifically …

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Winery Valuation 101

It was either Churchill or Napoleon who said that “in victory you deserve champagne, in defeat you need it.” In a post-COVID world, consumers certainly haven’t admitted defeat but they’ve taken to wine to deal with the “next” normal. Case in point; wine sales (along with beer, hard seltzer and distilled spirits) are up…big. Whether you are a producer making an Estate Pinot Noir from grapes on your Russian River vineyard or a consumer searching …

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Exit Strategies Adds Machinery & Equipment Appraisal Services

Exit Strategies Group, Inc. (ESGI) is pleased to announce that we are expanding our valuation services offering to include Machinery and Equipment Appraisals, also referred to as asset appraisals. Asset appraisals can be an adjunct to a business valuation, or provided as a stand-alone service. Adam Wiskind, CBI, CMEA will be leading this practice out of our San Francisco Bay Area (Sonoma County) office. Our appraisers are Certified Machinery & Equipment Appraisers (CMEA) through the …

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Valuing a Business in the Time of COVID-19

Business owners and investors alike are asking themselves the same questions in the current COVID-19 environment.  Are there opportunities in downturns? If so, when do you know when buy and sell? What are my illiquid assets worth? A former boss and one of the best bond traders I’ve ever met frequently used a popular trader’s phrase that predicting when a market will bottom and turn is “like trying to catch a falling knife.” A recent article revisited …

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Valuing a Business in Bankruptcy

According to data collected by the U.S. Bankruptcy Courts, business bankruptcies declined from 60,750 (or 4% of total filings) in 2009, just after the 2008 financial meltdown to approximately 22,750 in 2019 (or approximately 3%).[1]  With overwhelming challenges ahead as a result of the Coronavirus Pandemic, the question is not if these filings will go up over the next 12 months but by how much. Before I dig into valuing a business in bankruptcy, let’s …

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