Advanced Business Appraisers

06/21/2017

Is your business average? Or is it above average or below average? If you are above average or below average does that affect the value of your business? It should. It certainly should.

If your accountant or appraiser is using a database to find out what similar company sell for and then uses that multiple on your company without any adjustment they are doing you a disservice. Very few companies are actually average. By definition half of the companies are above average and half of the companies are below average. If your company is above average it is because it has characteristics that are favorable to your company and add value to your company. Buyers are willing to pay extra money for those characteristics.

However, if your company is void of those characteristics or those characteristics are very weak, then buyers will pay less money for your company. This is because they are getting less value.

02/12/2016

What affect do you think the falling stock market has on the values of privately held companies?

11/15/2015

One of the best things that you can do to prepare for selling your business is to make sure that your accounting records are in great shape. If your accounting records are in disarray, buyers will question your financial statements, and your price. It will erode your credibility. Buyers will start to question everything you say more skeptically if they start to question your books.

10/05/2015

When you sell a business you have to determine when is the best time to let people know. The people that are interested may include your employees, customers, vendors, accountant, attorney, landlord and of course your competitors. Most business owners don't want anyone to know that they are selling their company. However, many of the above parties will need to know at some point.

Most small business sales are asset sales. So a buyer will start their own company and purchase the assets of the seller. If they are interested in hiring the employees (which they generally are), they actually hire the employees into their new corporation. These employees have a termination date with their prior employer and a new hire date with their new employer. This can seem strange for many employees since they are going to the same place to work and doing the same job. However, they are really new employees.

The best time to tell these employees about your selling decision varies with employees. If you have a loyal and stable workforce, you can choose to let them know earlier in the process. High turnover work forces are often better informed later in the decision process. Talking to a business broker and other trusted advisors can be helpful in thinking through the right timing in your situation.

05/21/2015

How many customers is the right number of customers to have? The fewer customers that you have, the more that you can know about each customer, what they like and what is best for them. However, the fewer customers that you have, the more reliance that you put on having each customer. If one customer leaves and you only have 5 customers, you can imagine how much that might impact your firm. While we don't recommend that you get rid of a large customer, you should be aware of how much risk you face if one of your larger customers either leaves, or reduces their future ordering levels. Contingency planning is critical for with large customers.

04/08/2015

One of the biggest anchors to value for small companies is a business that is too dependent on the owner. Most owners have put heart and soul into building their business only to find out that it doesn't have much value. The value that they have been building is in themselves, not the business.

How can an owner get around this problem? They need to ensure that they have systems in place to get the work completed that don't rely solely on them. They need to delegate to other people tasks with systems in place to help those employees.

If you cannot get away from your business for a week or two for vacation, that is a good sign that you don't have much of a business and that you are the business.

Call us to help you over that problem so that you can continue to build value in your company.

01/12/2015

Michigan has been working hard to rise up this list. Michigan is becoming a business growth state.

Small Business Policy Index 2014 measures the environment in each state as to how policies impact entrepreneurship, investment and small business growth.

05/11/2011

When purchasing a business buyers need to remember that they need to hold some capital back from the purchase price for working capital. It takes a certain amount of cash in a general operating account to run a business. Every business is different, so the level of working capital varies. However, you have to hold some cash in reserve for daily operations.

05/11/2011

* Asking prices are only starting places for negotiations. I have too many clients that walk away from a good business because they thing the price is too high. If you put in a fair offer, you may be pleasantly surprised where the conversation leads.