💬 WACC and cost of equity are not interchangeable. When there’s debt in the capital structure, using the wrong one can sink your valuation. Here’s how to tell the difference—and get it right. 👉 Explore our white paper on WACC vs. Cost of Equity
7a Business Valuation Field Notes
Welcome to 7(a) Business Valuation Field Notes — a running series of insights, strategies, and quick reads pulled directly from our content library. Designed for SBA lenders, brokers, and business buyers, these posts break down complex valuation topics into practical, bite-sized guidance you can actually use. Whether you’re navigating fair market value, tackling SOP compliance, or trying to make sense of goodwill and cash flow, this is your go-to resource for grounded valuation clarity — straight from the field.
✅ Is Your Valuation Model Tax-Affected? It Should Be.
💬 Pass-through entities don’t pay taxes at the corporate level—but does that mean we should value them as if taxes don’t exist? Nope. Here’s why ignoring tax-affecting can seriously overstate value. 👉 Download the white paper on Tax Affecting Pass-Through Income
✅ Risk and Return — What SBA Lenders Must Understand
💬 Higher returns only come with higher risk. But are your valuations quantifying that risk properly? Here's how risk impacts cap rates and value — explained clearly for lenders. 👉 Download the white paper discussing Risk and Return as it applies to SBA 7a business valuations.
✅ Machinery & Equipment Appraisals in SBA Lending — When Are They Required?
💬 If your loan package includes significant hard assets, a business valuation alone may not cut it. Here’s when lenders generally engage an M&E appraisal. 👉 Read our white paper on Machinery & Equipment Valuation for SBA Loans
✅ How to Treat Rent When Business and Real Estate Are Acquired Together
💬 When a buyer is acquiring both the business and the building, what rent should be used in the valuation? The answer matters. A lot. 👉 Check out our white paper on Normalizing Rent for SBA Transactions
✅ Discount for Lack of Marketability – Even for Controlling Interests
💬 DLOM isn’t just for minority stakes. Controlling interest or not, a private company without a liquid market deserves a discount. Here’s why — and how to apply it. 👉 Read the full DLOM white paper
✅ FIRREA, USPAP, and SBA SOP — What’s Required in Business Valuations?
💬 Three different rulebooks. One valuation. Are your appraisals meeting the right standard for SBA lending? Here’s how to make sense of FIRREA, USPAP, and SBA SOP. 👉 Check out our comparison white paper
✅ Are You Inflating Value by Ignoring Taxes?
💬 There’s no such thing as a ‘tax-free return.’ If you’re using a market-based cap rate on untaxed S-corp income, you’re overstating value. Let’s fix that. 👉 Get the full breakdown in our white paper on tax-affecting income
🚩 Red Flag Story: Working Capital Ignored
🔍 A buyer was acquiring a business for $1.2M. Everything looked clean—until we noticed the working capital wasn’t included. No cash. No receivables. No payables.Zero net working capital in the deal. The value dropped once we adjusted for what the buyer would actually receive. Lesson: consider the assets transferred, not just the income stream.
🧠 The Role of Working Capital in Valuation
💡 In SBA valuations, working capital can quietly make—or break—a deal. When calculating free cash flow and total value, we ask: ✔️ What working capital is actually being transferred?✔️ Will the buyer have enough to run the business Day 1?✔️ Is there a working capital deficit they’ll need to fund? Ignoring working capital? That’s like … Continue reading 🧠 The Role of Working Capital in Valuation
Highland Global Business Valuations 