business appraisal tips

7 Deadly Sins of Selling a Business: 4. The Fourth Deadly Sin—Inexperienced Professionals

~ Certified Business Appraiser

Most small business owners are skilled at running their business but do not have the background that is conducive to successfully negotiating a transaction involving their business. Lacking negotiating skills may result in leaving money on the table in the transaction. As this is not an optimal outcome for the business owner, it is wise … Continue reading 7 Deadly Sins of Selling a Business: 4. The Fourth Deadly Sin—Inexperienced Professionals

7 Deadly Sins of Selling a Business: 5. The Fifth Deadly Sin—Insufficient Financial Information

~ Certified Business Appraiser

Lack of financial information from both the seller and the buyer of a business has the ability to quickly kill a deal. Nothing is more embarassing for the transaction advisor than to get to close the closing table only to find out that the buyer does not have the money to successfully close the deal. … Continue reading 7 Deadly Sins of Selling a Business: 5. The Fifth Deadly Sin—Insufficient Financial Information

7 Deadly Sins of Selling a Business: 6. The Sixth Deadly Sin—Failure to Cooperate

~ Certified Business Appraiser

Once the owners of a business have made the commitment to pursue a sale or merger of their company, a great deal of time must be spent on those parts of the process that lead to the closing—free flow of information, coordinating site visits with prospective buyers, due diligence, etc. Whilst the transaction advisor will work … Continue reading 7 Deadly Sins of Selling a Business: 6. The Sixth Deadly Sin—Failure to Cooperate

7 Deadly Sins of Selling a Business: 7. The Seventh Deadly Sin—Failure to Disclose Problems at the Outset

~ Certified Business Appraiser

After prospective buyers have been pre-screened and have expressed sufficient interest in pursuing an acquisition of the company, preliminary due diligence begins. Preliminary due diligence is a basic analysis of the company, its financial position, etc. to whatever extent permitted by time and the willingness of the owners to divulge information at this stage. Typically, … Continue reading 7 Deadly Sins of Selling a Business: 7. The Seventh Deadly Sin—Failure to Disclose Problems at the Outset

7 Deadly Sins of Selling a Business

~ Certified Business Appraiser

Many business owners are individuals who have started or acquired a business. Most of these business owners have considered or will consider at some point an exit strategy in order to retire, achieve liquidity to pursue other business ventures, etc. Exit planning may be part of the business owner’s overall strategy of acquiring, growing the … Continue reading 7 Deadly Sins of Selling a Business

Top 10 Questions of Value: 10. What is the Difference between EBITDA and Seller’s Discretionary Earnings and Why are they Important in Financial Analysis?

~ Certified Business Appraiser

EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA earnings are used by many valuation professionals and financial analysts as a method to compare the cash earnings of a subject company with cash earnings of comparable companies. This method of earnings comparison is useful because it equalizes differences between or among companies in … Continue reading Top 10 Questions of Value: 10. What is the Difference between EBITDA and Seller’s Discretionary Earnings and Why are they Important in Financial Analysis?

Top 10 Questions of Value : 9.What Is the Difference between Enterprise Value and Equity Value?

~ Certified Business Appraiser

Sometimes people use the two terms interchangeably. However, for valuation purposes there may be a significant difference in the two terms. Enterprise value is often referred to as the value of the invested capital which includes the value of the equity and the value of the firm’s liabilities. This could represent the asset side of … Continue reading Top 10 Questions of Value : 9.What Is the Difference between Enterprise Value and Equity Value?

Top 10 Questions of Value: 8.What Is the Difference Between an Expert Consultant and Expert Witness?

~ Certified Business Appraiser

As an expert consultant, the valuation professional is engaged to develop information that will be used by the attorney in a variety of ways, including settlement negotiations with the opposing side. In these instances, the valuation professional is usually not expected to testify or to develop an opinion of value that will be entered into … Continue reading Top 10 Questions of Value: 8.What Is the Difference Between an Expert Consultant and Expert Witness?

Top 10 Questions of Value: 7. How Is a Valuation Useful when Drafting Buy-Sell Agreements?

~ Certified Business Appraiser

Buy-sell agreements for privately-held companies provide the shareholders with a mechanism by which the interest of a deceased or withdrawing shareholder may be liquidated through a repurchase agreement, a cross-purchase agreement, or a hybrid agreement. Providing for how the value of the shares is established is critical for a successful buy-sell agreement. Generally, there are … Continue reading Top 10 Questions of Value: 7. How Is a Valuation Useful when Drafting Buy-Sell Agreements?

Top 10 Questions of Value: 6. Are “Rules of Thumb” Useful in Business Valuations?

~ Certified Business Appraiser

Rules of Thumb are generally expressed as multipliers. A common example would be that some particular type of business will sell for .75 to 1.50 times annual revenues. Another popular multiple is a multiple of discretionary earnings. For example, a particular type of business is said to sell for X times Seller's Discretionary Cash Flow … Continue reading Top 10 Questions of Value: 6. Are “Rules of Thumb” Useful in Business Valuations?