š ļø A buyer wanted to roll up a local competitor.The broker used a 4x multiple because of projected cost savings post-close. But those savings: ā Wouldnāt apply to anyone elseā Didnāt exist on paperā Violated FMV standards We valued it using historical cash flow for the SBA 7a loan. Deal got restructured. Everyone wonābut the … Continue reading š Case Study: The āPerfect Fitā Problem
How To Value A Business
š§ Sin Spotlight: Valuation Built for That Buyer
š§Æ Deadly Sin: Valuing for a Specific Buyer (a.k.a. Strategic Drift) When a valuation includes: š¼ Synergy from the buyer's operationsš Growth from the buyer's networkšŖ Savings from shared space... ā¦itās not fair market value. Itās strategic valueāand it violates SBA requirements. š If the value only works for one buyer, itās not supportable in … Continue reading š§ Sin Spotlight: Valuation Built for That Buyer
Valuation Strategies for M&A Success
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
š§ Fair Market Value vs. Strategic Value
Not all valuations are created equal.Thereās a critical difference between fair market value and strategic valueāespecially in SBA 7(a) lending. ā Fair Market Value assumes a hypothetical buyer with no special motivations.š¤ Strategic Value reflects what a specific buyer might be willing to pay for their own reasons (synergies, territory, IP, etc.). š” If youāre … Continue reading š§ Fair Market Value vs. Strategic Value
š Resource Drop: Customer Concentration Discount Guide
š Our Customer Concentration Discount Guide gives lenders the tools to adjust for risk properly. Includes: ā Industry-adjusted risk levelsā Sample discount scenariosā How to discuss with borrowers š© Click here to grab your copy.
š Case Study: 1 Customer = 72% of Revenue
We reviewed a $1.7M business valuation of a manufacturing firm based on smooth cash flow. But then we asked: Who are the customers? How much of revenue comes from the top one? Answer: 72% š³ We applied a risk discount. Value dropped ~30%. Buyer and lender restructured. Deal closedāwith protection. š If one customer leaves … Continue reading š Case Study: 1 Customer = 72% of Revenue
š§ Sin Spotlight: The 1-Customer Problem
š§Æ Deadly Sin: Ignoring Customer Concentration Risk If one client makes up 30%+ of revenue, your cash flow has a single point of failure. Yet appraisals often: ā Ignore this riskā Apply normal multiplesā Assume āitāll be fineā š Appraisers and SBA lenders must adjust valueāor structure around itāwhen concentration threatens stability.
The Impact of Key Person Loss on Business Valuation in the SBA Loan Context
The sudden death or departure of a key individualāoften the founder or ownerācan devastate a small businessās 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
Why the Harmonic Mean is Best for Analyzing Financial Ratios
When analyzing business valuation multiplesāsuch as price-to-revenue (P/R) or price-to-EBITDAāchoosing 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
š Resource Drop: Franchise Valuation Checklist
š We created a Franchise Valuation Checklist for SBA lenders and analysts. Includes: ā Common franchise-specific red flagsā Required adjustmentsā Royalty treatmentā Risk factors š© Click here to grab your copy.
Highland Global Business Valuations 