📉 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
How To Value A Business
📚 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
Business Valuation as a Range, Not a Point – Reconciling Reality with SBA Compliance
Business valuation is both an art and a science. While it relies on empirical data, financial models, and accepted methodologies, the final conclusion often involves professional judgment and assumptions. This gives rise to the concept of valuation as a range, a notion widely accepted in academic literature, professional standards, and practical appraisal work. However, when … Continue reading Business Valuation as a Range, Not a Point – Reconciling Reality with SBA Compliance
⚖️ 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
Why Fair Market Value Often Falls Short of the Purchase Price in SBA 7(a) Deals: 10 Reasons Every Lender Should Know
In SBA 7(a) business acquisitions, a common hurdle arises: the fair market value (FMV) in the business valuation report is lower than the agreed-upon purchase price. FMV represents what a hypothetical, willing buyer would pay for a business based on its current, verified financial performance. This gap can delay loan approvals, frustrate borrowers, and complicate … Continue reading Why Fair Market Value Often Falls Short of the Purchase Price in SBA 7(a) Deals: 10 Reasons Every Lender Should 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
📚 Valuation Myth: Asset Sales Don’t Require Valuations
The Myth:When selling just the assets, you don’t need a full business valuation. The Reality:Even asset sales often include goodwill/intangible assets — all of which require formal valuation analysis, especially for SBA loans and tax compliance. Why It Matters:Ignoring non-tangible value can trigger tax issues, deal disputes, and underwriting gaps. Practical Tip:Evaluate total enterprise value … Continue reading 📚 Valuation Myth: Asset Sales Don’t Require Valuations
✅ No, S-Corps Aren’t Worth More Just Because They’re S-Corps
💬 If tax status alone made a company more valuable, every C-corp would flip the switch. Here's why that's a myth — and how to value pass-throughs with accuracy. 👉 Download: 'Entity Value Shouldn’t Depend on Tax Election'
🏠 Owning the Building Doesn’t Make Rent Free
When a buyer acquires both the business and the real estate, rent must be normalized. Why? Because rent represents a real economic cost—even if the seller wasn’t charging themselves. Takeaway: Use market rent, not historical self-rent. It impacts earnings, valuation, and ultimately debt service coverage. Check out our article and video on this topic!
Highland Global Business Valuations 