In business valuations for SBA 7(a) lending, the premise of value plays a pivotal role in determining how a company is assessed. The two primary premises of value are the going concern and liquidation premises. This white paper explores the conceptual differences between these premises, their implications on valuation methodology, and their application in SBA … Continue reading Going Concern vs. Liquidation Premise of Value in SBA 7(a) Business Valuations

Relocating an established restaurant in an urban U.S. market is a complex endeavor that can significantly affect the business’s valuation. Whether the restaurant is an independent eatery or part of a franchise chain, moving to a new location introduces operational disruptions and financial uncertainties that valuation professionals must carefully consider. This white paper analyzes how … Continue reading The Impact of Restaurant Relocation on Business Valuation

Marketability—the ability to convert an asset to cash quickly with minimal value loss—is a critical factor in business valuation. Privately held companies, lacking public market access, often require a Discount for Lack of Marketability (DLOM). While commonly associated with minority interests, DLOM is also relevant for controlling interests, though its application is more nuanced. This … Continue reading Discount for Lack of Marketability in the Valuation of Controlling Interests in Privately Held Companies

Leasehold improvements—such as customized build-outs or interior upgrades made by a tenant to a leased space—are a common feature of business operations, especially in retail, healthcare, and food service sectors. But when it comes to valuing a business for acquisition or SBA lending, how should these improvements be treated? This white paper explores the nature … Continue reading Leasehold Improvements in Business Valuation: Sunk Costs or Transferable Value?

SBA 7(a) loan underwriting relies on global cash flow (GCF) to assess the collective repayment ability of borrowers and guarantors, while business valuations for SBA 7(a) acquisition loans focus on free cash flow (FCF) to determine a business’s stand-alone value. This white paper clarifies the distinctions, purposes, and reasons GCF cannot justify higher valuations, emphasizing … Continue reading Understanding Global Cash Flow in SBA 7(a) Loan Underwriting vs. Free Cash Flow in Business Valuations

In mergers and acquisitions (M&A), valuation is a strategic linchpin, not merely a mathematical exercise. A well-executed valuation aligns buyer and seller expectations, secures financing, and drives deal closure. This white paper outlines advanced strategies to optimize M&A outcomes, integrating robust modeling, scenario planning, and due diligence preparation, supported by current industry insights and best … Continue reading Valuation Strategies for M&A Success

The sudden death or departure of a key individual—often the founder or owner—can devastate a small business’s viability and value. When operations, customer relationships, or specialized knowledge hinge on a single person, the loss can shift a business from a going concern to distress. This white paper examines the financial, operational, and valuation consequences of … Continue reading The Impact of Key Person Loss on Business Valuation in the SBA Loan Context

When analyzing business valuation multiples—such as price-to-revenue (P/R) or price-to-EBITDA—choosing the right type of average is essential to avoid misleading conclusions. While many professionals default to the arithmetic mean (a simple average), a more accurate and meaningful metric for ratios is the harmonic mean. This article explains why, using real-world examples and straightforward explanations for … Continue reading Why the Harmonic Mean is Best for Analyzing Financial Ratios

Regression analysis in business valuation, particularly the Direct Market Data Method (DMDM), relies on R-squared (R²) values. This article examines these statistical concepts, their interpretation and their implications for SBA 7(a) valuations. The Role of R-Squared in Regression Analysis R-squared (R²) measures the proportion of variance in the dependent variable (e.g., sale price) explained by … Continue reading Interpreting R-Squared in Business Valuation: A Cautious Approach to the Direct Market Data Method

Transaction databases are integral to the market approach in business valuation, providing empirical data on private company sales. This article examines three leading databases—BIZCOMPS, ValuSource Market Comps, and DealStats—highlighting their advantages, limitations, and implications for valuation accuracy. The report integrates commentary and research from valuation professionals and third-party sources to offer a well-rounded perspective. 1. … Continue reading BIZCOMPS, ValuSource Market Comps, and DealStats in Business Valuation