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M&A Multiples: Business Value v. Balance Sheet Value

Buyers and Sellers Need to Negotiate Delivery Targets for Working Capital and Agree on a Fair Market Value for Fixed Assets. Valuation principles generally hold that the value of a business is largely a function of return on invested capital and growth, writes Ron Stacey, since these are the primary drivers of free cash flow. But how does this cash flow relate to the asset and liability values on the balanc ...

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Do You Know What Your Business Is Worth? You Should. —New York Times

Few Business Owners Seem to Even Know How to Make a Good Guess at What Their Business is Worth.  NY Times Introduces Technology to Help—and Certified Advisers Provide Extra Value.  Mark Cohen, at The New York Times Small Business Guide, reports:  "At 53, Joe Ritz is old enough to remember a time when many of the classic cars that now pull into his specialized repair shop were new. “It’s one field where it p ...

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Small Business Considers How to Manage Growth, Comply With Healthcare Mandates —Wall Street Journal

Health Costs on His Mind, Small Factory Owner Looks for Ways to Cope With New Law Emily Maltby and Sarah E. Needleman at The Wall Street Journal talk with a small business owner outside of Chicago who's considering ways to manage growth, preserve profit, and comply with the new healthcare law. Automation Systems, with with sales of about $1.6 million for 2012, currently employs 40 full-time workers, mostly ...

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409A Options Valuations: Who Pays the Price and What We Can Do

UConnect v. Facebook Showed How 409A Valuations Can Destroy Value. Here’s What Shareholders and VCs Need to Know—and Some Ideas About How to Better the Situation. Lorenzo Carver previously explained how 409A valuations destroy value for shareholders receiving grants, and provided a case study of how this all played out in UConnect v. Facebook. In this final article in a three-part series, Carver presents us ...

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Part II: Dual-Purpose 409A Valuations: Here’s Why and How They Overvalue Stock Options

The Winklevoss Twins Realized Too Late the Value They’d Agreed to for Their Common Shares of Facebook. Here’s How it Played Out. Last week Lorenzo Carver introduced the topic of how 409A valuations destroy value for some shareholders.  Today’s piece is a case study in how a wide disparity in value estimates largely created by the 409A process played out in the UConnect v. Facebook lawsuit. ...

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Dual-Purpose 409A Valuations: Here’s Why and How They Overvalue Stock Options

Why Built-up Volatility Rates Produce Better Value Indications In part one of a three-part series, Lorenzo Carver explains how the interaction between auditors and valuation professionals during dual-purpose 409A valuations of common stock and employee stock options destroys value for hundreds of thousands of employees receiving stock options every year by granting options at strike prices that are above th ...

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The Value of Brands in M&A

Acquiring Companies Need to Conduct a Brand Valuation Post-Acquisition to Comply with IFRS.  Here's Why it Makes Sense to Do it Before the Acquisition.   As all companies complying with IFRS must carry out a brand valuation post acquisition for compliance, there’s a strong argument for carrying out the necessary due diligence and valuation beforehand, explains the marketing director of Intangible Business, ...

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5 Things Small Business Investors Need to Know about “IP”

The Wall Street Journal's Small Business Blog featured recently a guest column by Antone Johnson on the use, misuse, and misvaluation of intellectual property.  It's probably of interest to valuators and financial consultants who are working with small business owners to value and growth their businesses.   Venture capitalists, angel investors and start-up lawyers these days tend to be obsessed with "intell ...

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