The Myth:Future projections are enough to justify value — no need to back them up. The Reality:Projections without clear support are just optimistic guesses. Buyers and SBA lenders need evidence — like written plans, assumptions, customer contracts, and operating history — to trust future performance claims. Why It Matters:Relying on unsupported projections can inflate value … Continue reading 📚 Valuation Myth: Projections Don’t Need Support
Valuation Insights & Articles
Welcome to Valuation Insights & Articles, where Highland Global shares thought leadership, expert guidance, and commentary on the ever-evolving world of business valuation. Here, you’ll find practical insights tailored for SBA lenders, business owners, attorneys, and financial professionals. Topics include SBA 7(a) valuation standards, goodwill analysis, tax-related valuation, M&A strategy, litigation support, and valuation methodology best practices. Stay informed with clear, actionable content rooted in real-world experience and regulatory knowledge.
🎁 Resource Drop: Addback Risk Review Tool
📘 We created an Addback Review Tool to help SBA lenders validate free cash flow adjustments. Includes: ✅ What counts as legitimate✅ Addback audit checklist✅ Review questions 📩 Click here to grab your copy.
📊 Case Study: “Adjusted” to Death
Seller showed $450K in cash flow after $160K in adjustments. Problem: $36K was “one-time” marketing (used every year) $28K in car leases for sales personnel $19K in non-owner bonuses “not needed post-sale” $27K of normal business insurance Final adjusted FCF: ~$340KValuation dropped. Loan size reduced. Buyer injected more equity. 📌 Always test the addbacks.
🧠 Sin Spotlight: Fantasy Free Cash Flow
🧯 Deadly Sin: Addback Abuse = Fake Cash Flow We’ve seen appraisals with: ❌ Business travel labeled as “discretionary”❌ All advertising added back❌ Working owner and spouse payroll erased with no replacement If the addbacks are inflated, the cash flow is fantasy—and so is the value. 📌 SBA valuations must reflect economic reality, not seller … Continue reading 🧠 Sin Spotlight: Fantasy Free Cash Flow
📚 Valuation Myth: All Valuations Are Created Equal
The Myth:As long as the report has a number, it's reliable. The Reality:Not all valuations are based on credible data, accepted methods, or professional standards. Some are biased, boilerplate, or created to hit a target. Why It Matters:Relying on a weak or non-compliant valuation can lead to poor decisions — or SBA loss of guarantee. … Continue reading 📚 Valuation Myth: All Valuations Are Created Equal
✅ Global Cash Flow ≠ Business Value
💬 Lenders use global cash flow to underwrite loans. But business valuation? That’s a different animal. Here’s why you can’t justify a higher price using global cash flow. 👉 Read our white paper on Global Cash Flow vs. Free Cash Flow
✅ WACC ≠ Cost of Equity — And Why That Matters
💬 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
✅ 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.
Top 10 Misunderstandings SBA 7(a) Lenders Have About Business Valuations
Business valuations play a pivotal role in underwriting SBA 7(a) loans, especially for business acquisitions. However, many lenders misunderstand key principles underlying valuation methodology, potentially leading to flawed underwriting, non-compliance with SBA SOP requirements, or exposure to guaranty denial risk. This white paper outlines the ten most common misunderstandings SBA lenders have about business valuations … Continue reading Top 10 Misunderstandings SBA 7(a) Lenders Have About Business Valuations
Highland Global Business Valuations 