Valuation

Your Construction business may not be worth as much as you think it is…yet!

Do you know how much your business is worth? And by worth, we mean what price it would realize if it was sold today. It is not unusual for business owners to think their business is worth more than it actually is. This difference is often referred to as the value gap. If your business […]

In the absence of a buy/sell clause, everyone gets caught in the crossfire

By Rick Evans In my previous post, I talked about what is arguably the most important, but often most overlooked, component of a shareholder agreement – the buy/sell clause. This mechanism establishes the ground rules for the orderly transfer of an ownership interest. I’ve seen a lot of unfortunate situations in my work—shareholders who pass […]

When tragedy struck, these shareholders were prepared

5 In my last post, I presented a case study about Howard, the owner of a successful manufacturing company. When Howard passed away without a suitable buy-sell clause to ensure an orderly transfer of his ownership interest, all of the business’s stakeholders were caught in the crossfire. These included the other shareholders, his wife and […]

7 reasons why an up-to-date valuation is an asset to your business

By Rick Evans Many business owners only obtain a valuation of their business when they are considering a sale, or reacting to an unforeseen situation. But there are benefits to always having an up-to-date valuation in hand. It’s a proactive measure that ensures you are acting from a position of strength when the unexpected does […]

A buy/sell clause helps prevent business divorces from getting messy

Business partners set up shop with the best of intentions. It’s a relationship that must be built on mutual trust and respect. But no matter how strong a personal or professional relationship is at the outset, shareholder conflicts and other events may occur that can affect the continuity of the business operations. A mechanism and […]

Reasonable Compensation

One of the most subjective and discretionary expenses for many small closely held businesses or professional practices is owner compensation. Reasonable compensation is a key assumption in the valuation model as it can have the most impact on the profits of the closely held business. This is due to the fact that compensation recorded in […]

Restaurant woes: Serving up a disappointing retirement outlook

It seems odd that a business owner would work his or her whole life on their business and then determine the business’s value based on what they “think “the business is worth, or an industry rule of thumb. If the sale of your business is going to fund your retirement you should know what your […]

Your business may not be worth as much as you think it is…yet

Do you know how much your business is worth? And by worth, I mean what price it would realize if it was for sale today. Many times small business owners think their business is worth more than it currently is. This is often referred to as the value gap. If your business represents a significant […]

The Income Approach to Determining Business Value

The income approach is often the primary approach used for valuation and is used in the valuation of most operating companies. The income approach discounts the expected future cash flows (returns on investment) to present value using an appropriate rate of return for the investment. Future cash flows are typically based on the net after-tax […]