business valuation
Art of Negotiating a Business Transfer
Wednesday, September 8th, 2010 | consulting | No Comments
Negotiating a complex transaction like the sale or purchase of a business requires technical proficiency, sensitivity to the motivations behind statements from both sides, and creativity. A potentially great deal can be lost by focusing too much on the bottom line. The artful negotiator finds common ground, engages the parties on both sides of the transaction, and listens carefully for their real desires and needs. These undercurrents reveal opportunities to craft an agreement that might not be possible by traditional means.
Van recently assisted in the purchase of a service business that had been appraised significantly below the asking price. By listening carefully, examining financial data, using his intuition and offering options and advice, Van helped both sides talk about what they really wanted from the deal. The seller was ready to retire, and he wanted a steady income stream for years to come. The buyers saw potential to grow the business because of their strong ties to the community, but traditional bank financing was not a good option in this era of tight credit.
In the successful agreement, the seller is financing the deal. This bypasses the problems posed by traditional financing methods and gives him a regular income stream at a level the buyers feel is manageable. It’s a workable deal that might not have happened without the intuition and creativity that Van provided.
This artful approach works for both the buyer and the seller and in other situations where a negotiated agreement is desired, such as a property settlement in divorce. In the end, everyone involved must feel good enough about the deal to commit to it by signing the agreement. In this case, a well-established business in the community will continue because of this successful transfer agreement.
Better Property Settlement in Divorce
Friday, August 20th, 2010 | litigation, tax | No Comments
We’ve heard it said that the second most contentious issue in a divorce (after the children) is the property settlement. One side may resort to unusual measures to reduce the property settlement, while the other side may be seeking revenge or punishment through the property settlement. The intense emotions complicate the process of determining an equitable settlement.
We provide services to attorneys in all types of cases with financial issues. They may involve valuation of a family business, forensic accounting to aid in the process of ascertaining what assets are available for the settlement, and calculation of the needs of the spouse and children for maintenance and support. We also advise about the tax implications of various settlement options. Answers to all of these questions are vital in coming to an equitable settlement.
Our role varies with each case. For example, in a recent case, we assisted with discovery by ascertaining the true value of some marital assets and performing due diligence on the couple’s finances. With this improved information, the attorney was able to negotiate a significantly better settlement for his client than the initial offer. This is just one of the many ways we help improve results for our clients.
Buying a business
Thursday, June 3rd, 2010 | consulting | No Comments
We have been working with a couple of people who want to buy businesses. Getting good financial information from the seller has been key to determining the value of the business so that they can start the process of negotiating a deal that everyone can agree on.
The path to a successful deal can be lengthy, with many twists, turns, and decisions along the way. We’ve worked with our clients to help them understand what goes on, what they are getting into, and whether the numbers work. Although it is sometimes frustrating, it’s a good feeling in the end to know that we have helped our client negotiate the best deal possible under the circumstances. We’ll let you know how they work out.
Business Valuation Multiples
Wednesday, May 19th, 2010 | consulting | No Comments
The recession has many business owners thinking hard about their companies. We’ve listened to owners consider the effectiveness of their business model and how (or whether) to change it. They discuss downsizing, right-sizing, getting leaner. They try to figure out how to position their companies for the upturn, which still seems quite a way off for most. Some think about selling their business and moving on. Others are talking about acquisition as a strategy for growth if they can manage the finances.
If you are thinking about how much your business is worth, pinning it down to a number is difficult. One way to look at value is to figure out what the income stream generated by the business is worth. This article about business valuation multiples may shed some light on the question in terms that you can apply to your own situation. While there is much more to business valuation than presented here, and we do not endorse the author or his websites, the article gives some good general information that may help you understand this method of valuing your business.