As millions of baby boomers plan the sale of their businesses over the coming years, a trillion-dollar opportunity for them and their advisors, those who identify, measure and reduce risks will earn the highest values, while those relying on hope alone stand to lose millions and suffer seller's remorse
SAN DIEGO – Business owners have a major life event they each face: "How much can I receive for my company?" A critical step is obtaining an independent, qualified business appraisal. CPAs and attorneys then can recommend a transition plan that saves time, money and client worry.
"Our valuation reports are cutting edge because no other firm specifically identifies a company's value drivers and risks. These metrics become an owner and advisor roadmap. Thrifty owners err applying rules of thumb and software to save money. Neither captures the 800+ factors we consider. For every $1.00 paid in fees, we commonly find $200 to $10,000 in potential value. Let's take Relationships. We'll examine client concentration, vendor reliance, company culture, management depth, staffing turnover, advisor involvement and banking leverage. These factors reflect how the owner has managed and minimized risk; the lower the risks, the higher the pricing multiple and the higher the value," shares Carl Sheeler, Ph.D., ASA, a nationally recognized 20+ year business valuation expert.
Sheeler states, "Owners frequently overestimate their companies' values and underestimate the time needed to prepare and sell their companies. They might spread the risk, cash in some of their chips and have Private Equity or staff acquire a minority interest. The infused funds and skin in the game causes company values to climb manyfold in a few years. Reducing risks can easily change a pricing multiple from 3x to 7x earnings. Owners become excited knowing what they need to do and harnessing the knowledge of their trusted advisors, family and key staff to do it."
Business Valuations Ltd. has seven offices nationwide. Since 1954, it has served midmarket business owners and their advisors for tax, transaction and transfer purposes as well as disputes. Dr. Sheeler has been the firm's steward since 1992 and was the 2012 Worth Magazine's Leading Advisor. His doctoral dissertation addresses private company illiquidity. He authored the Valuation Chapter for the AICPA's and California Bar's Succession Planning Manuals.