The blended approach (the HBVS System) allows the business valuation to factor in more than just the income stream and owned assets, which for smaller firms in particular, can be a substantial component of value.

(Three types of consulting firms were valued in the study; 1) Micro-Niche Firm @ $200K revenues, 2) Small-Medium sized generalist firm @ $2.5M revenues, 3) Mid-sized niche firm @ $17.5M revenues. The results were illustrated by spread sheet which allows for interesting comparisons)

This exercise highlights the down-to-earth usefulness of a non- subjective business valuation system, as a consistent and comprehensive approach to the market worth of consulting (or any other) firms. Financial performance and assets pull no punches.

An information based small, mid-size business valuation system, as a baseline, centers on factual and insightful data. Subjectivity may come into play, but only after financial inputs have produced a price level that seems fair to both a motivated seller and a willing and qualified buyer. Put more simply, its hard to get excited when the P/E Ratio is in the teens. Need we say more. Continue reading →

Simply stated, the whole process of deciding to add, change, buy, or sell a business should begin with a professional business valuation to determine its “real world” market value. And when a business has been valued properly, everyone wins. Here’s a representative example drawn from experience with hundreds of business appraisals over many years my firm has worked with:

TYPICAL BUY-SELL SCENARIO – An industrial distributor marketing products and services within a 100-mile radius of its Midwest location. Present annual sales, $1,750,000. In business 25 years; present staff of 13 includes 2 salespeople. In this situation, using a professional business valuation as a basis for monetary buy/sell negotiation has proven equitable for both buyer and seller. Here’s why. Continue reading →