Independent Business Appraisals

7 Deadly Sins of Selling a Business: 5. The Fifth Deadly Sin—Insufficient Financial Information

~ Certified Business Appraiser

Lack of financial information from both the seller and the buyer of a business has the ability to quickly kill a deal. Nothing is more embarassing for the transaction advisor than to get to close the closing table only to find out that the buyer does not have the money to successfully close the deal. … Continue reading 7 Deadly Sins of Selling a Business: 5. The Fifth Deadly Sin—Insufficient Financial Information

7 Deadly Sins of Selling a Business: 6. The Sixth Deadly Sin—Failure to Cooperate

~ Certified Business Appraiser

Once the owners of a business have made the commitment to pursue a sale or merger of their company, a great deal of time must be spent on those parts of the process that lead to the closing—free flow of information, coordinating site visits with prospective buyers, due diligence, etc. Whilst the transaction advisor will work … Continue reading 7 Deadly Sins of Selling a Business: 6. The Sixth Deadly Sin—Failure to Cooperate

7 Deadly Sins of Selling a Business: 7. The Seventh Deadly Sin—Failure to Disclose Problems at the Outset

~ Certified Business Appraiser

After prospective buyers have been pre-screened and have expressed sufficient interest in pursuing an acquisition of the company, preliminary due diligence begins. Preliminary due diligence is a basic analysis of the company, its financial position, etc. to whatever extent permitted by time and the willingness of the owners to divulge information at this stage. Typically, … Continue reading 7 Deadly Sins of Selling a Business: 7. The Seventh Deadly Sin—Failure to Disclose Problems at the Outset

7 Deadly Sins of Selling a Business

~ Certified Business Appraiser

Many business owners are individuals who have started or acquired a business. Most of these business owners have considered or will consider at some point an exit strategy in order to retire, achieve liquidity to pursue other business ventures, etc. Exit planning may be part of the business owner’s overall strategy of acquiring, growing the … Continue reading 7 Deadly Sins of Selling a Business

7 Deadly Sins of Startups from a Valuation Perspective: No Risk/Return Analysis

~ Certified Business Appraiser

One of the most difficult considerations for an entrepreneur is the risk/return analysis of the potential business venture. An incomplete or poorly-reasoned risk/return analysis on the part of the entrepreneur may lead a savvy financial investor to turn down a potential investment in the business in favor of an apparently less risky opportunity. Even in … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: No Risk/Return Analysis

7 Deadly Sins of Startups from a Valuation Perspective: Unrealistic Growth Expectations

~ Certified Business Appraiser

Planning for too little growth and trying to play catch up when growth exceeds expectations creates a number of challenges, such as the need to expand operations and capacity and the resulting requirement for capital expenditures and potentially, additional financial resources. However, planning for too much growth is just as bad, if not worse, in … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: Unrealistic Growth Expectations

7 Deadly Sins of Startups from a Valuation Perspective: Lack of Startup Managerial Experience

~ Certified Business Appraiser

While many startup entrepreneurs have experience in a corporate setting, few have had experience actually running an entire operation on their own. In a corporate setting, there are already established relationships, financial resources, and managerial depth across other key functional areas of the business. Usually, in a corporate setting, the functional areas are also managed … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: Lack of Startup Managerial Experience

7 Deadly Sins of Startups from a Valuation Perspective: Operating On Shoestring Budget/No Working Capital

~ Certified Business Appraiser

Too often, entrepreneurs believe the business will quickly generate enough cashflow to sustain operations and, thus, enter into the new business with insufficient financial resources. They may try to operate on a shoestring budget until the business reaches cashflow break-even out of necessity due to a lack of access to additional financial resources. This may … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: Operating On Shoestring Budget/No Working Capital

7 Deadly Sins of Startups from a Valuation Perspective: No Break-even Analysis

~ Certified Business Appraiser

A key part of the financial projections and business plan is for the entrepreneur to conduct a break-even analysis. The traditional break-even analysis reveals what level of sales a business must achieve to cover both the variable costs (cost of goods sold) and the fixed costs (overhead), resulting in $0 profitability. Beyond the break-even point, … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: No Break-even Analysis

7 Deadly Sins of Startups from a Valuation Perspective: No Formal Business Plan

~ Certified Business Appraiser

Along the lines of the first deadly sin, the lack of a formal business plan is also common among small businesses and startups. New entrepreneurs often mistakenly believe that opening a business and putting a sign outside is enough. It is usually the business plan that segregates viable businesses from an entrepreneur’s hobby that they … Continue reading 7 Deadly Sins of Startups from a Valuation Perspective: No Formal Business Plan