The Myth:You can apply a standard revenue multiple across all industries. The Reality:Revenue multiples vary significantly depending on margins, risk, industry dynamics, and growth potential. What works in SaaS, for example, doesn’t work for manufacturing or retail. Why It Matters:Applying the wrong multiple can lead to huge valuation errors — especially in SBA lending and … Continue reading 📚 Valuation Myth: Revenue Multiples Are Universal
business valuations
🏛️ What It Means to Be USPAP Compliant
USPAP governs how valuation work is developed and reported. Though not required for SBA valuations, following USPAP helps ensure your appraisal is credible, well-supported, and auditable. Takeaway: Not all valuation reports are USPAP compliant. And not all SBA lenders know the difference. Check out our article and video on this topic!
🧠 Why Multiples Aren’t Magic
📈 Multiples are just a shortcut. Not a value. Valuing a business based on “a 3x multiple” is like pricing a house based only on square footage. Real valuation = real analysis: Adjusted free cash flow Industry benchmarks Company-specific risks Working capital needs Multiples don’t close loans. Sound valuations do.
📚 Valuation Myth: Sellers Don’t Need Valuations
The Myth:Only buyers need a business valuation. The Reality:Sellers benefit even more from accurate valuations. A solid valuation helps set realistic expectations, improves negotiation leverage, and prepares sellers for buyer scrutiny. Why It Matters:Sellers who overestimate value often face failed deals, delayed closings, or steep price reductions. Practical Tip:Get a professional valuation before marketing your … Continue reading 📚 Valuation Myth: Sellers Don’t Need Valuations
🏛️ What FIRREA Really Requires for Business Appraisals
FIRREA sets the rules for federally regulated lenders—but most folks don’t realize it does not require USPAP compliance for business valuations. However, it does require supportable, well-reasoned opinions from qualified professionals. Takeaway: Know the difference between FIRREA, USPAP, and SBA SOP—each governs appraisals differently. Check out our article and video on this topic!
🚩 Red Flag Story: Strategic Buyer Overbid
📉 A strategic buyer offered $2.1M for a business. FMV? $1.15M. They saw value in: Route overlap Staff consolidation IP synergy But the SBA lender needed a fair market value opinion. Not a synergy-based fantasy. We ran the numbers. Deal got restructured. Buyer still closed—but brought more equity. ⚠️ Remember: Strategic value ≠ FMVDon’t underwrite … Continue reading 🚩 Red Flag Story: Strategic Buyer Overbid
📚 Valuation Myth: Brand Always Adds a Premium
The Myth:If you have a brand, your business is worth more. The Reality:Brand recognition only boosts value if it actually translates into cash flow. A well-known but unprofitable brand may not command any premium at all. Why It Matters:Valuations should measure brand strength by results — not reputation alone. Practical Tip:Quantify brand value based on … Continue reading 📚 Valuation Myth: Brand Always Adds a Premium
⚖️ WACC and Cost of Equity Are Not Interchangeable
They’re both discount rates—but they apply to very different cash flows. WACC is for free cash flow to the firm. Cost of Equity is for free cash flow to equity. Using the wrong one? You’re mismatching risk and return—and that throws off the valuation. Takeaway: Always align the rate with the income stream. It’s a … Continue reading ⚖️ WACC and Cost of Equity Are Not Interchangeable
🚨 Why the Valuation Falls Short — and What Lenders Need to Know
In SBA 7(a) deals, it’s not uncommon for the valuation to come in below the purchase price. But why does this happen — and what does it mean for lenders? We break down the Top 10 Reasons Fair Market Value Doesn’t Match the Deal Price, from understated rent and low owner salaries to unrealistic forecasts … Continue reading 🚨 Why the Valuation Falls Short — and What Lenders Need to Know
🧠 DLOM for Controlling Interests
⚖️ Can the discount for lack of marketability (DLOM) apply to a 100% controlling interest? Yes—when the business isn’t easily sellable or lacks liquidity options. ✅ Low marketability = real economic drag✅ Controlling stake ≠ liquid investment✅ DLOM should reflect the actual time and cost to exit the business We recently published a white paper … Continue reading 🧠 DLOM for Controlling Interests
Highland Global Business Valuations 