A Business Valuation is Not Just In the Numbers Leadership & Culture The culture of an enterprise may be hard to measure, but it nevertheless very important to the worth and value of a business. Employee retention and turnover is one important variable that appraisers will want to understand, as well as some of the underlying drivers. Companies with weaker benefits and compensation programs will likely face more competitive employment pressures and increased turnover, which in turn creates increased discounts to value when analyzed by a qualified appraiser. Another issue many businesses face is key person risk. We have enjoyed a [...]
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So far Laura Wright has created 44 blog entries.
A Business Valuation is Not Just In the Numbers As a professional business appraiser, we are called to provide our best estimate of fair value. On its face, it would seem relatively straightforward to assume that most of it has to do with the financial well-being of the company, which it does. However, it is also very easy to overlook some of the more salient issues in the ongoing operations of a business which subtract meaningful dollars from its value. In our experience, the issues most prevalent impacting potential valuations can be found in the following areas: financial operations, sales function, [...]
Making Intangibles Tangible: The Benefits of Measuring Intangible Assets If you have trouble understanding intangible assets, don’t worry – you’re not alone. Any discussion around intangibles can get complex due to accounting rules that are hard to explain, let alone understand. There are certain basic concepts, such as intangible assets, that as a manager you should know well. Why? Because intangibles are meaningful and material to your business at many different levels, and yet you cannot rely on accounting to help manage them because intangibles are not on your company’s balance sheet unless they have been acquired. And, in another strange [...]
Restrictive Covenants in M&A Transactions As most, if not all, M&A advisors have likely noticed, restrictive covenants, primarily in the form of non-competition and non-solicitation agreements or provisions, are customarily included in M&A transactions. The main purpose of including restrictive covenants in an M&A transaction is to safeguard the buyer’s value in the purchased business. By restricting the seller’s ability to compete with the purchased business, for a certain period of time following the closing of the transaction, the buyer is looking to ensure that the business that the buyer just acquired does not lose value due to the seller competing [...]
Our second interview features Dave Wimer, CBI, M&AMI of Murphy McCormack Capital Advisors located in Lewisburg, PA. Dave has had a diverse career as an owner/operator, key turnaround executive and M&A advisor. He is currently Chair of the M&A Source Communications Committee, a newly elected Board Member, and an Instructor for M&A Source with a NEW Course #472 - Preparing A Business For Sale using Simplified Value‐Prep® - The Proven Process for Growing and Protecting Business Value. Dave lives in Reading, Pennsylvania with his wife of 44 years, Toni, and his Portuguese Water Dog Maggie. He has four children and [...]
Earnouts Don't Deserve A Bad Reputation By Scott Bushkie, CBI, M&AMI When selling a business, an earnout is basically a commitment by the buyer to pay the seller a certain amount of money tied to future performance after a sale. While earnouts are a great way to boost the value of your company, they can be a dicey proposition for a seller. Even if you stay on with the business, you don't have complete control over how new ownership runs the company. If the business does well, you get paid. If business drops, you don't. Most times in the M&A world, [...]
Introduction and Background: The cannabis industry has arguably been one of the most talked about, but turbulent and testing markets in recent times. Despite a scattering of activity throughout the rest of the world, particularly in Germany and Uruguay -- Canada and the U.S. are where the bulk of the business buzz has been centered. Cannabis in Current United States: Divided opinions, politics and unknown health and societal implications have created much debate as to whether the drug should remain classified as a Schedule I Controlled Substance. According to Business Insider, as of June 2019, just 11 states and Washington, [...]
Risk Of Recession: Should I Sell My Business Now Many economists are suggesting that the U.S. is heading towards an economic recession. BBVA projections indicate a 60% probability that a recession will begin in the next 24 months, and Deliotte points out that a slowdown is “increasingly likely.” As a business owner, a looming recession can be difficult and strenuous. Should you hunker down and try to weather the storm, or should you jump ship now before the going gets tough? As with most complex business topics, the answer isn’t an easy one. There are several things to consider, and your [...]
Even at “hello” I could feel the tension. Four of them, one of me. I was feeling some heat as they stared at me, looking for answers. There were two representatives from each company. Their desire to merge was borne from a conversation between the two owners at a wedding three months earlier. It was fitting that they had this conversation at a wedding, because that’s the kind of relationship they were now talking about structuring. Or maybe best to call it an arranged marriage. The two companies were tired of beating each other up, bidding for the best employees, and [...]
Update on the BIEF Campaign for Clarity On September 11th, a subcommittee of the House Financial Services Committee (HFSC) held a public hearing on various bills, including HR 609, The Small Business Mergers, Acquisitions, Sales and Brokerage Simplification Act of 2019. In its memo announcing this hearing, the Financial Services Committee staff summarized HR 609 as follows: This bill would codify an SEC no-action letter by exempting certain merger and acquisition brokers from registration as broker-dealers. Under the bill, M&A brokers are defined as brokers that facilitate the transfer of ownership of privately held companies with earnings [EBITDA] of less than $25 million or revenues of less [...]