Six Critical Questions to Ask Would-be Buyers When prospective buyers call, it’s critical owners use the opportunity to capture valuable information about the market, who active buyers are, and what’s driving the value of their company. MidCap Advisors suggests six critical questions to discern what profit levels and growth rates a buyer is looking for and, most importantly, how a buyer approaches valuing companies.
-
-
Recommended Valuation Process for Buy-Sell Agreements: Single Appraiser Chris Mercer tells how to set up a Buy-Sell Agreement for closely held and family businesses. He identifies three key procedures: Owners should select an appraiser for their business when they create the Buy-Sell, that appraiser should offer an initial baseline valuation for the Buy-Sell, and the named appraiser should continue to value the practice each year or two thereafter. Here’s why.
-
How Much Do You Know about Protecting Personal and Corporate Information from Would-be Fraudsters? Find out what you know about how to analyze credit, what causes data breaches, what precautions to take when accessing hotspots in an airport with a laptop, current identity theft laws, and controlling physical access to restricted areas.
-
Catastrophic Events and Consequences for Value Managing catastrophic risk exposure is much more difficult than managing continuous risk exposure, explains Aswath Damodaran. Here’s how to incorporate the risk from catastrophes into valuation models.
-
Valuing Trademarks When Diamond Foods bought Kettle Foods, nearly 40 percent of its purchase price of $616M was paid for “brand intangibles.” How are such valuations determined and what are the drivers?
-
The Most Critical Challenges Confronting Medical Practices Recently, the Medical Group Management Association (MGMA) published results of its member survey and listed the top challenges facing physician practices today. Reed Tinsley recaps results. Here are critical factors physician executives should focus on to control costs, build incentives, ease management, and strengthen growth.
-
A Smart Approach to Board Level Risk Management As the economy recovers, companies that cut costs or deferred spending at the bottom of the recession are now looking to reinvest: in hiring, new debt, facilities or equipment, or business acquisitions. How much risk is too much? This presentation details critical internal and external factors to examine.
-
Tips for Family Businesses to Survive and Thrive When Tough Times Hit Can You Revive Your Distressed Family Business? The first step to figuring that out, Steven F. Agran explains, is an objective assessment of cost structure. What determines whether a business can be cash flow positive at current sales levels or even at lower levels, if sales continue to decline? Find out here.
-
Reviewing and Revising Partner Agreements. In my prior firm, the review and revision of partner agreements was a process that happened every ten to fifteen years, if that often. I think that is pretty common in most firms. The problem is that firms change and evolve as do the partners and the environments that we practice in. Our agreements need to keep pace with that change. I continue to be amazed at the number of firms that have no agreements at all or haven’t made revisions in many years.
-
Ron Stacey considers Return on Invested Capital (ROIC) and growth using EBITDA as a proxy for cash flow. ROIC, Stacey writes, is a critical value driver that’s probably the single most important factor for a given cost of capital. But calculation is never simple: “People always want a formula, but it doesn’t work that way,” Warren Buffet once noted. “You have to estimate total cash generated from now to eternity, and discount it back to today.” Here’s a case study. Find out how ROIC works—and what drives it.
-
At issue in Gross v. Commissioner is whether the petitioner made an indirect gift of public company stock to her daughters, thus negating any discounts for lack of control or marketability. Judge Halpern at the Tax Court ruled that the step transaction was not applicable and that a 35% discount was justified. Find out why.
-
The Financial Professional’s Guide to Healthcare Reform; Accountants’ Handbook, 12th Edition New titles from Wiley this summer include Scott Miller on Buyouts, Dietrich and Anderson’s thorough Financial Professional’s Guide to Healthcare Reform, Roman Weil et al. on Litigation Services and the Financial Expert, and Graham and Carmichael’s Accountants’ Handbook, 12th Edition.
-
How to graphically illustrate ratio analysis as a way to enhance and simplify summary findings. A key to providing clients with effective valuation reports—and persuading jurors as an expert witness—is the ability to provide quantitative analysis in a compelling visual fashion. Here, Greg Gadawski and Darrell Dorrell provide an example of how to graphically illustrate ratio analysis as a way to enhance and simplify summary findings.
-
An Introduction for Wealth Managers and Business Owners to the Concept of Managing Pre-Liquid Wealth What is the solution to financing the expenditures necessary to manage the wealth that is tied up in closely held businesses? The solution is so obvious that we overlook it, thinking that such activities either are too expensive, too time-consuming, or worse, not a high priority. For owners of closely held businesses, the solution lies in the decision to treat their ownership interests as an investment. This book introduces the concept of the One Percent Solution – a new and powerful way to manage all…
-
How to Arrive at an Appropriate Fair Market Price for a Medical Practice When valuing a medical practice, how do you determine fair market value in light of recent Stark II regulations? Some of it depends on the definition of the term “commercially reasonable.” And a lot also depends on accurate assessment of future revenues, as well as expense assumptions. Here’s a guide to what to keep an eye on as you navigate this territory.
-
Caveats that Careful Valuators and Consultants to Keep in Mind When Using the Market Approach to Valuation Authoritative sources such as the IRS, SEC, FASB, and professional appraisal associations consistently advocate market prices to be the best indications of value. But is that always true? Gregory R. Marsh argues that in some financial markets—at various times—there’s plenty of evidence that both buyers and sellers are either illogical or relying on uninformed guesses. Moreover, even if one grants that a market price is highly probable? That price can become irrelevant if a highly-leveraged company cannot secure additional or replacement financing before…
-
Biotechnology Valuation: An Introductory Guide Biotechnology is producing quantum advances in medicine, but the specter of unforeseen consequences from treatments has brought with it a parallel growth in litigation. Valuing biotechnology assets isn’t easy: generally accepted methods of discounted cash flows (DCF) and market comparison are sometimes difficult to apply in an industry rife with low probabilities of success, variable marketability, and patent lives shortened by the drug development and regulatory process. Karl D. Keegan’s Biotechnology Valuation: An Introductory Guide helps consultants navigate this growing field. Lari Masten reviews.
-
Most consultants, business owners, and attorneys understand that a good expert witness needs to meet core criteria of giving an independent opinion, being able to support that opinion under a vigorous cross examination, and communicate with and persuade a jury. But what else is important? Joe Epps explains.
-
Main Street Businesses: Smart Strategies for Exit Plan Main Street businesses are those with less than $3 million in annual sales and less than 20 employees. While Main Street businesses are the backbone of the U.S. economy, the U.S. Small Business Administration reports that four out of five of these businesses liquidate when the owner decides to retire rather than ending in a profitable sale to a new owner.
-
Smart Consultants Use Benchmarks to Add Insight and Increase Profits Business valuation professionals constantly use benchmarking tools to evaluate businesses that we determine values for—but we aren’t always as diligent in using benchmarking tools to evaluate and to manage our own consulting businesses. Dave Cooper explains why this should be a priority.