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Business Valuation Insights
What is Fair Market Value?
April 2, 2014 / in Business Valuation / by Al Statz
You’ve heard the term Fair Market Value many times. Fair Market Value is indeed the most common standard of value used in business valuations, but what does it actually mean? Fair Market Value is typically defined as “the price at which the property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both …
Why Should I Only Retain a Certified Valuation Expert?
March 17, 2014 / in Business Valuation / by Jim Leonhard
If you’re thinking of using a non-certified or non-credentialed individual to value a business, consider the following recent judicial ruling. The United States Tax Court ruled on February 11, 2014** that a valuation conducted by a non-valuation credentialed individual used for an estate tax filing was materially deficient. The individual who prepared the valuation was both a CPA and a CFP (certified financial planner), had written 10-20 valuation reports, and had testified in court. However, …
Why Should I get My Business Valued?
February 26, 2014 / in Business Strategy, Business Valuation / by Roy Martinez
I received a call the other day from a friend who owns a publishing company. I was telling him about the types of valuation projects I was working on, and he asked, “I’m not in the middle of selling my business or transferring it to my children; why would I want to have my business valued? Besides, I know the rules of thumb for my industry.” The answer I gave him was essentially the following. First …
Increase Business Value with Agreements
February 19, 2014 / in Business Valuation, Exit Planning / by Jim Leonhard
I recently completed an exit planning valuation of a business that enjoyed a very favorable discount on purchases of a key component used in the assembly of its products. The discount, negotiated many years ago, was a handshake deal between the founder of the company and his former employer who manufactured the component. This large discount enables the business to be significantly more profitable that it would be otherwise. Any investor or buyer for this business …
Tip for Maximizing Business Value: Diversify Your Customer Base
February 5, 2014 / in Business Valuation, Exit Planning / by Al Statz
Our seller and business valuation clients are usually proud of their company’s long-term relationships with major clients, and with good reason. Having a high percentage of business with a few customers can be a very profitable and personally satisfying way to run a business. It allows management to focus its attention and fine tune company operations to deliver exceptional service in a very cost-efficient manner. Customer acquisition expenses (marketing, sales, estimating, etc.) can be greatly …
Related Party Transactions in Valuation
January 15, 2014 / in Business Valuation / by Jim Leonhard
I was recently engaged to value a client’s interests in two businesses. These two businesses had several shareholders in common, and the businesses were doing business with each other. We refer to these as related parties and related party transactions. Our client’s ownership percentages were different in each business, so we were concerned with whether transactions between the companies were priced at market, versus prices that unfairly benefit one or the other business. I investigated …
Pro’s and Con’s of Price Formulas in Buy-Sell Agreements
January 3, 2014 / in Business Strategy, Business Valuation, Buy-Sell Agreements / by Al Statz
Exit Strategies is regularly called upon to determine the value of closely-held company shares for buy-sell transactions. Common events that trigger a transfer of shares are when a shareholder retires or resigns from employment, is fired, dies, or becomes disabled, divorced or insolvent. There are several facets to successful buy-sell transactions, but valuation is typically the most contested issue. The pricing method prescribed in your by-laws, shareholder, buy-sell or stock restriction agreement, as the case may be, …
Upcoming Event: A Fast-Paced Overview of Business Valuation for Attorneys
December 27, 2013 / in Business Valuation, News / by Al Statz
On January 29, 2014, Al Statz of Exit Strategies will be speaking to the Sonoma County Bar Association in Santa Rosa, California. The workshop, titled “A Fast-Paced Overview of Business Valuation for Attorneys”, will rapidly cover a wide range of valuation topics that will help attorney’s spot important issues and use business valuations more effectively in their practices. The comments will address valuations in estate, gift and tax, shareholder disputes, CC§2000 cases, marital dissolution, and of course …
Tip for Maximizing Business Value: Build for the Future
December 20, 2013 / in Business Valuation, Exit Planning / by Al Statz
Is your business built for the future? Consumer behaviors, markets, regulations and technology are changing so fast these days that many business owners are having trouble keeping up. And if the business doesn’t have a strong future, it simply won’t trade at a high valuation, or many not have any value at all. Private business owners must constantly monitor changes in their industry and marketplace, and make appropriate investments and take appropriate steps to insure the …
Why Should I Bother Valuing My Business?
December 13, 2013 / in Business Strategy, Business Valuation, Exit Planning / by Al Statz
A new article at Forbes.com addresses a question in the minds of many small business owners, “Why Should I Bother Valuing My Business?” The author explains several of the common reasons small business owners have their businesses appraised by an independent business valuation expert, as they prepare for a sale, buy-out, contingencies, retirement, or passing the business on to children.
Exit Strategies Group, Inc. is a leading provider of business sales and acquisitions, business valuations, and exit planning services for family owned and closely-held companies since 2002.
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