Posted by: Donald R. Parker, CFA, CVA
Many business owners procrastinate in creating a formal succession plan. They have many reasons for not planning ahead. But to achieve the best outcome for yourself and your family members, you need to have a solid exit strategy. Here are five of the top reasons why business owners ignore succession planning, along with the reasons why a proactive approach will result in the best outcome.
Valuing a business requires more than merely dropping numbers into a “black box” and waiting for the answer to be spit out. Using their professional judgment and specialized training, appraisers consider a broad range of internal and external factors before arriving at reliable conclusions of value. Business owners and professional advisors who understand what happens “behind the scenes” can facilitate the business valuation process.
Posted by: Donald R. Parker, CFA, CVA
Control is important to investors. And they usually will pay less for a business interest that lacks control over key decisions. As a result, the old adage “the whole is greater than the sum of its parts,” can — and often does — apply to business valuations. This article provides an in-depth example to explain how control affects the valuation of a business interest.
When evaluating a business valuation report, many people focus on the valuation conclusion and the mechanics of calculating it. However, the process that the valuator used to arrive at the conclusion and the evidence presented to back it up are what really counts. Take a look at the important factors needed in a good business valuation report.
When one considers how the value of an asset will be determined, it’s common to think about which method the appraiser will use or whether discounts may apply. A critical factor that might not immediately come to mind is the valuation or appraisal date. This article explains why the “as-of” date matters and how the purpose of the valuation guides this decision.
When hiring a business appraiser, you typically get what you pay for. Some business owners may be tempted to seek the offering with the lowest price tag. After all, a business valuation is just a formality, isn’t it? Many owners perceive formal appraisals as something required by an outside party — such as the IRS, a judge or a lender — in order to obtain approval or comply with a regulatory requirement. But a valuation actually provides insight into a company’s current market value, as well as key value drivers to enhance value going forward. A valuation can also serve as a wake-up call for business owners with unrealistic expectations.
The business valuation profession has grown rapidly since 1980. Over the decades, it has developed from a rudimentary process into a highly sophisticated mix of art and science to determine the value of a business or business interest. However, many business owners and investors fail to understand the valuation process and its results. Here are some common business valuation myths and the underlying truths.
When a business is sold, it often sells for more (or less) than the appraised value. This may come as a surprise to most people, but valuators understand that there are many valid reasons that “price” and “value” may differ. Businesses that understand this subtlety are better positioned to make informed decisions when buying or selling a business.
The Tax Cuts and Jobs Act is expected to have far-reaching effects that will vary significantly from company to company. In general, the new law lowers business tax rates. But it also reduces or eliminates various business tax breaks, while expanding others, either permanently or temporarily. Here’s a brief summary of the changes and how they affect business valuations.
