One of the quiet truths of this profession is that the valuation is often blamed for saying out loud what several people in the deal already suspected. That is part of the job. By the time the report is delivered, there is often disappointment, frustration, or resistance if the number does not support the structure … Continue reading The Valuation Is Often Blamed for Saying Out Loud What Several People Already Suspected

There is a moment in some transactions when the tone changes. It usually happens when someone asks a version of this question: What is this business worth without the seller in it? That is when the room often gets quieter. Because everyone knows that is not a casual question. It goes to the heart of … Continue reading The Room Gets Quiet When Someone Asks What the Business Is Worth Without the Seller

This is one of the quiet truths lenders already know, but not everyone else does: A good business is not automatically a good loan. A company may be respectable. Profitable. Longstanding. Well liked in the community. All of that can be true. And yet the transaction may still be too aggressive. The price may be … Continue reading A Good Business Is Not Automatically a Good Loan

One of the quiet truths in valuation is that some deals are priced as though risk were a technicality. As though it is something to mention, but not really something to weigh. The business has customer concentration. But the customers are “loyal.” The owner is central to operations. But the team will “step up.” Margins … Continue reading Some Deals Are Priced as if Risk Were Optional

Here is one of the quieter truths in a transaction: The seller is not the only one selling the deal. By the time some engagements reach the valuation stage, the transaction already has multiple salespeople. The seller is selling the history.The broker is selling the opportunity.The buyer is selling his capability.Sometimes even the lender is … Continue reading The Seller Is Not the Only One Selling the Deal

One of the quiet truths in small business valuation is this: Add-backs are often where discipline goes to get negotiated. Not always. Some add-backs are legitimate. Necessary, even. But this is the area where otherwise serious people can start getting remarkably creative. A recurring expense becomes “one-time.”A personal expense becomes “obviously discretionary.”A weak year becomes … Continue reading Add-Backs Are Where Discipline Goes to Get Negotiated

Let me say something carefully. Brokers are not the problem. Good brokers create markets. They create access. They create movement. They help transactions happen. That matters. But one of the quiet truths is that momentum itself can become the problem. Once a deal gets moving, every participant starts inheriting a psychological stake in continuation. The … Continue reading Brokers Are Not the Problem, But Momentum Can Be

There are certain phrases that tend to change the temperature of a deal. One of them is this: “The bank only needs this for compliance.” Whenever I hear that, I pay attention. Because sometimes what that phrase really means is: Please do not treat this like a serious economic review. Of course, not always. But … Continue reading The Phrase “The Bank Only Needs This for Compliance” Usually Means Someone Does Not Want Real Scrutiny

The buyer who says he is “being conservative” is often anything but. I hear that word often in transactions. Conservative. It sounds responsible. Measured. Disciplined. Bankable. But in deal language, “conservative” sometimes means: assuming revenue will stay where it is despite recent decline assuming payroll can be reduced without disruption assuming customers will remain after … Continue reading The Buyer Usually Says He Is Being Conservative Right Before Proving That He Is Not

One of the quiet truths in business valuation is this: The deal often starts sounding its best right before it starts coming apart. That is usually not a coincidence. When the facts are strong, people tend to be calm. The numbers speak for themselves. The explanations are consistent. The documents line up. But when support … Continue reading The Deal Usually Starts Sounding Better Right Before It Starts Falling Apart