Every valuation is a risk-adjusted exercise. The greater the risk, the higher the return an investor will require—and the lower the value today. This principle is baked into every SBA 7(a) valuation through the discount or cap rate. Takeaway: Risk is the price of opportunity. It should never be ignored or “smoothed out” in small … Continue reading 📉 Low Risk? Low Return. High Risk? Better Be Worth It.
goodwill valuation
🧠 FMV ≠ 10x EBITDA
📢 Just because a company sold for 10x EBITDA doesn’t mean your deal should be valued that way. Market comps are helpful—but only when adjusted for: Size Industry Risk Terms Liquidity SBA lenders need fair market value—not headline multiples.
📚 Valuation Myth: Book Value Sets a Minimum Value
The Myth:A business is always worth at least its book value. The Reality:If the business isn’t profitable, or if its assets are illiquid or obsolete, the true value may fall below book. Buyers pay for income potential — not just recorded assets. Why It Matters:Using book value as a floor can lead to overvaluation — … Continue reading 📚 Valuation Myth: Book Value Sets a Minimum Value
SBA 7(a) Business Valuation Multiples Cheat Sheet
This cheat sheet provides estimated price-to-revenue (P/Revenue) and price-to-EBITDA (P/EBITDA) multiples for small businesses across various industries, based on heuristic and empirical data from transactional and valuation analyses and cross-referenced with market research. These ranges are tailored for SBA 7(a) loan valuations, focusing on businesses with revenues typically under $5M. This cheat sheet is designed … Continue reading SBA 7(a) Business Valuation Multiples Cheat Sheet
🏦 Why Global Cash Flow Can’t Justify a Higher Valuation
Global cash flow is great for underwriting—but it doesn’t belong in a valuation model. Valuation relies on free cash flow from the subject business—not combined with personal income, spouse wages, or real estate. Why? Because buyers only buy the business, not the owner’s other income sources. Takeaway for lenders: If you use global cash flow … Continue reading 🏦 Why Global Cash Flow Can’t Justify a Higher Valuation
🚩 Red Flag Story: Broker-Driven Valuation
📉 A deal came in at a $3.5M price tag based on a broker "valuation." Their logic? “Because similar businesses sell for 5x.” But: No normalized cash flow No working capital terms No review of recurring CapEx We valued it at $2.1M. The lender restructured the deal. Buyer still closed—safely. Brokers sell optimism. Lenders need … Continue reading 🚩 Red Flag Story: Broker-Driven Valuation
🧠 Business Valuation vs. Real Estate Appraisal
🏢 Real estate appraisals follow rules. Business valuations require judgment. That’s why: FMV (fair market value) for a building can be +/- 2% FMV for a business might swing 20–30% depending on assumptions Appraisers must justify every step. But subjectivity is built into valuation—because businesses are messy. SBA lenders need to understand both sides of … Continue reading 🧠 Business Valuation vs. Real Estate Appraisal
📚 Valuation Myth: A Business Appraisal = Equipment Appraisal
The Myth:A business appraisal is the same thing as an equipment or asset appraisal. The Reality:Business valuations analyze total enterprise (or equity) value — including goodwill, cash flow, risk, and intangibles — while asset appraisals focus on the resale value of physical equipment. Why It Matters:Confusing the two can result in incomplete collateral analysis or … Continue reading 📚 Valuation Myth: A Business Appraisal = Equipment Appraisal
When Bigger Multiples Mislead: A Guide for SBA Lenders
Mainstream headlines and investment pitches frequently highlight multiples from public companies, private equity-backed platforms, or high-growth sectors like SaaS, where enterprise-scale premiums and optimistic growth projections push EV/revenue multiples into the 5–8× range and EV/EBITDA to 8–15× or higher. For instance, the S&P 500's average EV/EBITDA often hovers around 10–16×, reflecting benefits from low risk, … Continue reading When Bigger Multiples Mislead: A Guide for SBA Lenders
💸 Why the Same Business Can Have Two Different Values
Confused clients often ask: “Why did the valuation change? It’s the same company!” Here’s why: it’s not about the business—it’s about the deal structure. A stock purchase is riskier for the buyer than an asset purchase with leverage. That means a higher required return—and a lower equity valuation. Backed by Nobel-winning theory from Modigliani & … Continue reading 💸 Why the Same Business Can Have Two Different Values
Highland Global Business Valuations 