Archive for the ‘Business Valuation’ Category

When Should You Start Thinking About Succession Planning?

Monday, February 10th, 2014

You’re busy serving customers. Managing employees. Overseeing the day-to-day operations of your business. Stepping down as the head of your company may not be on your radar, but sooner or later you’ll need to think about what will happen to your business once you’re out of the picture. We recommend that business owners start thinking about their business succession plan at least five years before planning to implement it.  (more…)

What Are 6 Things You Can Do To Improve The Health Of Your Business in 2014?

Monday, December 30th, 2013

Are you out of breath from the impact the economy had on your business during the last several years? Is it time to develop some New Year’s resolutions that will make a difference in your business? Adopting a new diet, jumping on the treadmill or committing to run a half marathon are common items on the “personal” resolution menu. However, is it time to add energy and resources to your resolutions in order to improve the health of your business?  (more…)

What Are The Top 5 Challenges Business Owners Face in Today’s Economy?

Thursday, September 26th, 2013

You may find that being your own boss is extremely rewarding. Starting a business from the ground up takes a lot of hard work, and you’ve been seeing the fruits of your labor. But your success doesn’t come without challenges. Business owners are facing some tough challenges these days, and you yourself may be experiencing some of these growing pains. Here’s a list of the top 5 challenges I’m seeing business owners like yourself facing in today’s economy. Do any of these resonate with you?

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Do You Have An Exit Strategy?

Thursday, August 29th, 2013

This month marks my 38th year in public accounting, 32 of which have been as a principal interacting with business owners and executives of closely held entities. I have been able to observe the good, the bad and the ugly as it relates to exiting a business. Throughout the years, I’ve had the privilege to serve some outstanding captains of industry who exemplified the ideal way of exiting a closely held business.  (more…)

Did You Know That Treating Your Business like an Investment Can Lead to Wealth?

Wednesday, June 19th, 2013

If you’re a business owner, did you know that you can significantly increase your net wealth by simply changing the way you look at your business? (more…)

What Legacy Do You Want to Leave?

Friday, April 12th, 2013

Last year, I was consulting with a client who owned a business that was worth over $20.0 million. He said that one of his advisers told him “Why waste your time and money developing an exit and succession plan? You will be dead and won’t care and let others take care of it after you die.”

I guess that’s a good plan – if you don’t mind the chaos it creates for your family members and if your legacy is not important to you. (more…)

How Do You Choose a Business Exit Strategy?

Thursday, January 17th, 2013

Exit strategies are the options that you have to leave your business.  There are only a few exit strategies that Ohio business owners can choose from and each will provide you with a different level of proceeds when you leave. All strategies will require planning and time to implement.

It’s never too soon to start planning your exit. You will eventually leave your business, and it’s better to do so before a life-changing event forces you out. The sooner you plan, the more options you will have. (more…)

How Do You Protect the Value of Your Business?

Friday, August 31st, 2012

One of the most basic individual investment principals is the concept of diversification. As an investor, diversification can protect you from a large drop in your portfolio due to the poor performance of any one investment.

If you own a business, the business value is most likely more than half of their entire net worth.  You cannot simply call your investment advisor and quickly sell a part of your business to diversify.  It is possible to sell a partial interest in a business, but this is not available to all business owners and requires significant amount of planning.

So, what can you do to protect your net worth from dropping from a large decrease in the value of your business?  (more…)

Is Now the Time to Gift a Business Interest?

Tuesday, July 10th, 2012

2012 Gift Tax Exemptions and Business Planning

As you go about your day-to-day work within your business, you might not be thinking about what will happen when it’s time for you to leave the company. However, recent changes in the gift tax laws have created a window of opportunity that could allow you to transfer more of your business interests for less tax liability than at any other time in history. (more…)

What’s Your “Get Out of Business” Plan?

Friday, May 18th, 2012

You’ve worked hard to build your business and probably can’t imagine a time when it won’t be a major part of your life.  But, someday, you’ll approach retirement and you’ll want to spend more time enjoying your life and less time balancing your books.

Maybe you’ll want to leave your business to your daughter.  Maybe you’ll want to sell it and cash out.  Either way, business transition doesn’t just happen.  It isn’t serendipitous.  You need a “get out of business” or succession plan. (more…)

Do You Need a Business Prenup?

Tuesday, May 15th, 2012

About 25 percent of businesses fail within the first year, according to Small Business Trends.  Only 44 percent survive for four years.  What if your business doesn’t make it?

If you don’t have a buy-sell agreement, things could get hairy. Or if you developed one in haste and never update it, the buy-out probably won’t be fair to all parties. The hassles from litigation that result from faulty buy-sell agreements could last for years and negatively impact your business. (more…)

How do you create a succession plan?

Wednesday, April 18th, 2012

One measure of great business leaders is that their businesses continue to thrive once they leave their positions.  Visionary leaders captain the ship today while making plans for someone else to take the helm tomorrow.  Proactive succession planning allows businesses to continue their smooth sailing long after the captain abandons ship. (more…)

How can you protect your family business?

Tuesday, March 13th, 2012

Did you know that research shows that young men and women today will likely have more spouses than children? Unfortunately, that could have a huge impact on your family business. (more…)

How do you follow IRS regulations when gifting a business interest?

Friday, February 17th, 2012

Lately we’ve been surprised by how many people are thinking about filing a gift tax return without a business valuation. We’ve had a few conversations with people who are under the impression that they don’t need to attach a valuation of their business interest to the gift tax return.

Before you file your return without a valuatio (more…)

Receive Rental Income? Start Keeping Records in 2011

Friday, January 14th, 2011

Corporations, partnerships, individuals and trusts that receive rental income from property should plan to keep additional records in 2011. As a result of 2010 legislation, they will be required to issue IRS Form 1099-MISC to service providers, such as plumbers, painters and accountants, of $600 or more during the 2011 tax year. (more…)

How do I keep my succession plan on course?

Thursday, January 13th, 2011

The future of your family business might not be in the front of your mind as you go about your day-to-day routine. But if you have a defined plan that everyone is aware of, you can more effectively prepare for a successful transition when the time comes to put it into place. (more…)

How Does Communication, Timing Impact My Business Succession Plan?

Monday, December 13th, 2010

Over the past few weeks, we have discussed steps to follow when you develop a succession plan for your business. First, we made the decision to do a succession plan. We looked at the value of the business. We explored all of the options for transition. And we determined your personal and professional goals and those of your family and key personnel. Now it’s time to set a course of action. (more…)

Succession Planning: Do You Know Your Options?

Monday, November 15th, 2010

Are you actively planning a transition for the business you worked so hard to build? The majority of North American businesses are family-owned, yet just about 30 percent make it to the second generation. Even fewer reach the third generation. As more and more business owners prepare to retire, more and more businesses will face the issue of succession – whether they are prepared or not. This article discusses the third in a series of tips to help family-owned businesses begin the succession planning process. (more…)

Have you included a business valuation in your succession plan?

Friday, November 5th, 2010

In an earlier post we discussed the important step of making the decision to begin the succession planning process. Once you have made the decision to begin the process, knowing the value of your business is the second crucial step in the transition plan. (more…)

how do you evaluate and price a product line for sale?

Friday, October 29th, 2010

The price paid for a product line (or a business) is typically determined by a return on investment (ROI) calculation. The buyer estimates the future benefit stream from the product line and then determines the required rate of return that is needed to entice them to purchase it. The required rate of return is a function of how risky the future benefit stream is.  If the future benefit is in doubt or risky, the required rate of return will be higher. There is an inverse relationship between the required rate of return and the value of a product line. Our job as business valuators is to determine what the future benefit stream will be and what is the proper rate of return required for that benefit stream.

Whenever you are considering selling a business or a product line it’s important to get a true value by using a professional business evaluation. Usually the seller does not have any experience selling a product line or a business, and not knowing all the facts could cost tens of thousands of dollars. The buyer may be very sophisticated. There are many complex issues in addition to negotiating a price in a transaction that should be considered, such as the terms of a deal and the purchase price allocation. 

The terms include whether the price will be paid in cash or by a note or stock. If there is a note, the question becomes “Will this note be secured?” “Are there conditions required to be met by the seller to be paid?” and “How long will it take to pay back?” Purchase price allocation is critical to any deal. It can be the difference between paying a 15 percent tax rate on your gain or 40 percent tax rate.  

As you can see, there are many considerations to selling a product line or business. Don’t attempt to navigate the complex area of business transactions alone.

Is it time to start planning the sale of your business?

Friday, July 23rd, 2010

Every business strategy should include an exit plan for leaving the business. This can hinge on the owner’s personal financial and estate planning efforts, and a successful transition depends on many factors. (more…)

Why should I treat my business as an investment?

Friday, April 23rd, 2010

To answer this question, think about the stocks and bonds you may have invested in. Everyone wants to maximize the value and annual return on their investments. But many owners of closely-held businesses don’t place the same attention and care to determine the value of their businesses or work to improve their return on their largest investment.

Just like your stock portfolio, your business requires tending to help it create greater wealth. And just as you pay a fee of about one percent of your portfolio to an investment advisor to track and value your assets, you should plan the same to invest in the valuation and management of your business value. Typically 50-70 percent of your net work is tied up in your business. If you could double its value, wouldn’t you do it? Other businesses have seen this type of return and you can too. (more…)