How Business Valuations Drive Smarter Lending Decisions This article provides a case study that highlights the methodology behind SBA-compliant business valuations. The article underscores the importance of grounding the analysis in standard valuation techniques, using reliable industry benchmarks, and properly documenting adjustments. The role and value of business appraisers to the lender and parties involved in a potential SBA-financed transaction is also discussed. Business valuations play a vital role in SBA financing. For both 7(a) and 504 loan programs, an independent business valuation is typically required in the following situations: The total financing amount (including SBA loans, seller financing, or…
-
-
Issues Using Transactional Databases and whether there is a Florida Effect that Biases the Transaction Multiplies In this article, the author discusses issues that impact the transaction multiples. He warns appraisers that it is dangerous to assume that the data offered by the transactional databases is consistent from transaction to transaction and, therefore, can be combined into a single sample and then compared to the subject of the valuation. In the article, he discusses three issues. Those are: 1) the vast differences in selling prices reported by the transactional databases; 2) the distorting effect of Florida comparables; and 3) the…