Business Valuations: Resources

Rules of thumb can be useful to determine if a proposed business transaction seems reasonable prior to accepting an SBA loan application. However, most businesses are unique, and…

Do I need a desktop or an on-site equipment appraisal? This is a question that should always be asked and discussed with the machinery & equipment appraiser you…

The conclusion of value in any business valuation includes all operating tangible and intangible assets. Tangible assets can include working capital plus fixed assets such as furniture, fixtures…

When you need an equipment appraisal, you want it completed as quickly and painlessly as possible, without compromising quality. Equipment appraisal timing depends on a number of factors…

Seller’s Discretionary Earnings (SDE) is an integral cash flow stream for small businesses. SDE encompasses all cash flows paid to a single owner-operator, including an adjustment for owner’s salary,…

In the previous SBAvalue™ article Calculating Cash Flow (appraiser vs. lender), we discussed how a business appraiser calculates Seller’s Discretionary Earnings (SDE), which is an integral cash flow…

Do you know what your business is worth? Not the back-of-the-envelope guesstimate, but an independent appraisal of your company and what you could potentially receive if you decided…

Valuing a business can be difficult and complicated. It requires following a complex set of rules, knowledge of valuation techniques, factors driving value in the industry, laws and…

In general, a small to mid-sized business is defined as a business that is privately owned and usually has up to 500 employees, depending on its industry. Calculating…

Written by: Matt Safft, CVA (4 -6 minute read) As discussed in Part 1 of this newsletter (www.reliantvalue.com/financial-statement-adjustments/), financial statements may not portray the economic reality of a…

In real estate, arm’s length transactions refer to a business deal where parties involved have no previous relationship prior to negotiating an agreement. In this type of transaction,…

Written by: Michael Schykerynec, CMEA (3 – 5 minute read) When an inventory appraisal is required, the goal is to have it completed as quickly and painlessly as possible,…

Written by: Matt Safft, CVA (5 -7 minute read) Financial statements are typically prepared according to accounting principles or income tax standards. However, for small to mid-sized businesses,…

Companies may report secondary sources of income that are not derived from its main business on their income statements. To determine whether this income should be included in…

The SBA has released an updated version of its Standard Operating Procedures (SOP) 50 10 5(J), which is effective January 1, 2018. The following discussion highlights key revisions…

“What is my company worth?” This seems like such a simple question, but in reality, is quite complex to answer. In today’s world, no two businesses are alike,…

Company Specific Risk (CSR) is a specific risk rate that is applied to any one company and can greatly affect its value. CSR is a subjective adjustment made…

When performing a business valuation, many different risk factors have to be taken into account, including barriers to entry. Barriers to entry are the obstacles or hindrances that…

Recurring revenue is the portion of a company’s revenue that will continue into the future. It is important to note that these are not the revenues that are…

To first understand how to mitigate the risk of customer concentration, you first must understand what customer concentration means. Customer concentration is a measure of how total revenue…

Is Inventory Included in the Final Value? (6-7 minute read) An SBA compliant business valuation should reflect the structure of the proposed purchase terms. If the subject company…

To understand how an owner’s involvement in a business affects its value, one must first understand how the company being valued is operated. The owner’s involvement in any…

Written By: Todd Kutcher, CVA and John Milnes, CVA (6 – 7 minute read) Customer concentration is a measure of how total revenue is distributed among a company’s…

Written By: Matt Lore, CVA and Todd Kutcher, CVA (3 – 5 minute read) In a partner buyout, one or more existing owners of the business purchase the…

The SBA has released an updated version of its Standard Operating Procedures (SOP) 50 10 5(H), which is effective May 1, 2015. The following discussion highlights key revisions…

Depreciation is not a precise measurement of “reduction in value” from original cost. It is an estimate of the decrease in the useful life of an asset, and…

As stated in the SBA Standard Operating Procedures (SOP), if the purchase price of a business includes intangible assets in excess of $500,000, the borrower (or seller, in…

Business valuations compiled for SBA purposes are complex, often containing over 80 pages of financials, projections and analysis.  Unfortunately, many readers are tempted to skim the summary page…

How do you know what kind of value to expect for equipment or assets that are being liquidated? Depending on the circumstances surrounding the liquidation (and how fast…

Prior to obtaining a business appraisal for a change of ownership loan, one of the most important processes for an SBA lender is structuring their use of proceeds…

Written By: Michael Schkerynec, CMEA and Ross Blanchard, ASA (3 – 5 minute read) Inventory is typically one of the largest assets a bank uses for collateral. Having…

Written by: Ben Varone, CVA (2 – 4 minute read) A price to revenue multiple represents the ratio between the value of a business and its annual revenues….

Due to the precautions to limit and slow down the spread of the novel coronavirus 2019 (COVID-19), many small businesses have experienced some level of decline in their…

We are often asked by our clients why we need to adjust the rent paid by a business in a business valuation; and more specifically why we request…

A common request we receive from our bank clients is to include the machinery & equipment remaining useful life (RUL) in the equipment appraisal. This request often comes…

It is important for all SBA lenders to be familiar with the requirements related to loans involving Special Purpose Properties; including who should be engaged to appraise the…