Different potential buyers of a business will arrive at very different values. Why? Because buyers have different interests, motivations, knowledge, and plans for what they might do if they become the owner. Generally, informed buyers calculate the value of a business with a focus on two key levers: 1. Future Expected Cash Flows: The income,Read More…
It’s often said that a business is worth whatever someone is willing to pay for it, so why should a business owner bother with a formal valuation, especially if they have no immediate plans to sell? After 50 years of valuing closely held businesses and assisting owners in preparing for ownership transitions, we’ve found thatRead More…
Business owners often consider sharing ownership with key employees for one of two primary reasons: 1. Ownership succession planning. 2. Increasing the likelihood that key employees will stay with the company. Initially, sharing ownership might seem like a wise, easy, and low-cost way to engage and retain key employees. If done carefully and selectively, thisRead More…
As the saying goes…. “Don’t get into business with ANYONE without first defining how you’ll get out of ownership.” Starting a business or deciding to share ownership can seem straightforward initially. However, a critical aspect often overlooked is defining how each owner will eventually exit that ownership. After 50 years of working with business owners,Read More…
Often when business owners think about transitioning out of business ownership, they focus on numbers and logistics first but don’t always consider what they will do after transitioning out of ownership. We’re talking about the big ‘what’s next?’ question that almost all of us face at some point in our careers, and the reaction businessRead More…
Are you wondering what the value of your business is if you sold to a competitor or other type of “best fit” buyer, (i.e., buyer with a strategic interest in the acquisition of your business)? Different than selling to an inside employee group or passive investor, the sale of a business to a best fitRead More…
Here’s a scenario we see occurring frequently: A 100% owner of a business wants to sell a 10% equity interest in their company to a key employee so they have some “skin in the game” and are less likely to leave and go elsewhere. Let’s assume the business owner has recently had a business valuationRead More…
There is no shortage of new ideas and books each year on how to best manage your business. Most of these business management books are providing ideas which will ultimately (hopefully!) result in increasing the value of your business as an investment. In actuality, when done thoroughly, the business valuation process encompasses an analysis andRead More…
As you may have heard us say previously, every business has more than one value, depending upon who the buyer is. Different types of buyers are motivated differently based on what they could do with the business if they were to own it, as highlighted on our Buyer’s Chart. For example, some buyer types areRead More…
Goodwill, or ‘blue sky,’ is probably the most misunderstood component of business valuation. Business owners are often curious about goodwill in their business and how it is valued, and they are also often confused.In their minds, the intangibles including renown of the business, the years of successful business operation, their client list, their trained staff,Read More…