How to Determine Tangible and Intangible Business Assets
Even if you aren’t planning to sell your business in the near future, it is smart to keep track of your tangible and intangible assets. As the business owner, it may not be obvious to you how to differentiate your … Continue reading
The Real Importance of Business Valuation
(When Cashing Out Profitably is the Objective)
Two HBVS Projects Follow With Substantially Different Outcomes: Mid size West Coast Construction Firm. HBVS was engaged by an engineering firm in India to value this firm in the LA area. After initial contact the owner commented “I don’t know … Continue reading
Valuation of Consulting Firms – a Blended Approach
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
What is the Market Value of Your Business? Part 1
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
What Is The Market Value Of Your Business? (Part 2)
Source: Acquisition Cincinnati, OH Financial Data – What’s Needed? As a general rule, the more financial data that is available, the better. If your accounting system is sophisticated enough to produce internal Balance Sheets and P&L Statements, they are certainly … Continue reading