🧯 Deadly Sin: Overvaluing Personal Goodwill If the business relies on the seller’s relationships, charisma, or technical expertise—it may not transfer. And if the valuation assumes those intangibles stick around, the lender’s at risk. ✅ Enterprise goodwill = transferable🚫 Personal goodwill = fragile 📌 If the cash flow walks out the door with the owner, … Continue reading 🧠 Sin Spotlight: Goodwill That’s Too Personal

📘 New lender tool: Our Rent Normalization Memo Template Includes: ✅ What “market rent” means ✅ Where to find rent comps✅ How to adjust cash flow✅ Sample memo language for credit files 📩 Click here to grab your copy.

A $1.8M valuation looked solid—until we saw the seller was charging their business just $1,000/month for a property worth $4,500/month in rent. ⚠️ That $3,500/month gap = $42K/year = ~$250K in overstated value We adjusted the rent. Value dropped. The loan structure changed—and the deal stayed alive. 📌 Always ask: Is the rent realistic post-sale?

🧯 Deadly Sin: Misaligned Rent in Biz + Real Estate Deals When the seller owns both the business and the building, the rent may be: 🏷️ Below market (to reduce tax liability)💸 Above market (to inflate building income)❌ Not normalized in the valuation If the appraisal uses the wrong rent, the cash flow—and business value—are … Continue reading 🧠 Sin Spotlight: Rent Isn’t Always Market-Based

📊 Our Working Capital Evaluation Worksheet helps SBA lenders assess WC adequacy in valuations. Includes: ✅ Key WC components✅ Red flag indicators✅ Questions to ask borrowers and appraisers 📩 Click here to grab your copy.

📉 A business showed $250K in free cash flow—but no AR, no inventory, no AP transferred in the deal. The buyer would have had to inject ~$180K in operating cash just to open the doors. We adjusted for working capital deficiency. Deal restructured. Crisis avoided. Earnings without operations = nothing.

🧯 Deadly Sin: Ignoring Working Capital Too many appraisals focus only on earnings—and forget to analyze what’s being delivered. Working capital = the fuel that keeps the business running. If the seller walks with all the receivables and payables?The buyer might be walking into a cash trap. 📌 SBA valuations must consider working capital structure—and … Continue reading 🧠 Sin Spotlight: Working Capital Ignored

📘 We created an Owner Comp Normalization Guide with benchmarks and red flag scenarios. It includes: ✅ Where to find comp data✅ How to normalize for passive vs. active owners✅ Valuation report examples✅ A checklist for appraisers and underwriters Click here to grab your copy.

💼 A seller was taking a $30K draw and claiming $180K in “cash flow.” But they were the full-time operator—sales, ops, admin, everything. Market comp for a GM in that role: $105K Real free cash flow: ~$75KReal value: about 60% of the asking price. Lesson: If you don’t normalize the salary, you’re not valuing a … Continue reading 📊 Case Study: Overstated Cash Flow via Owner Draw

🧯 Deadly Sin: Not Adjusting Owner Compensation If the valuation doesn’t reflect what the buyer would have to pay competent management, it’s wrong. We adjust to: Market-based replacement salary Industry comp data Buyer skill set, not seller tax strategy 📌 If an owner pays themselves $20K but would need to hire a GM at $95K, … Continue reading 🧠 Sin Spotlight: Owner Salary Missed