Substitute early action for never-ending analysis to increase value
New ideas must be exposed to challenge, question, and clarification. But if owners don’t understand the right way to run an evaluation process, even a cure for the common cold will collapse under a barrage of “what about?” questions from well-meaning (or not) colleagues and partners.
“It’s just hard to have robust answers about an unknown [...]
A simple question that some owners chose not to answer
When thinking of succession planning, there are many standard questions–do the kids want the business? Am I taking enough out of the business for retirement? Do I want to keep working? What do my partners think?
But, BV.com’s interviews show that a surprising number of owners don’t, won’t, or can’t answer the simple valuation question; [...]
Are you overleveraged now? What is it costing you?
Here’s a really helpful thought from the ClarityBV Blog:
One of the most common ways to measure leverage is the debt to equity ratio. However, in recent years many tools that are more sophisticated have been developed. One of the most popular of the recent tools is the Altman Z-Score, a formula for predicting bankruptcy.
You might be [...]
Depressing: median sale price/revenues is now 47%
If you’re thinking of selling your business in 2010…take care. Valuation multiples have definitely taken a fall over the past two to three years, and the newest data from Pratt’s Stats® shows no sign of the much-publicized “recovery:”
Year of Sale
Count
Median revenue
Median selling price
Median price/ sales multiple
Median price/ gross profit
2007
1,493
$844K
$419K
0.58
1.03
2008
1,626
$535K
$250K
0.52
0.88
2009
862
$483K
$207K
0.47
0.74
“It’s important to note that the above includes [...]
How do business owners think?
A new study by Pepperdine University, reported to BV.com by John Paglia, an associate professor of finance at Graziadio School of Business and Management there, shows that private company owners can generally be described as gut-feel, risk taking operators with short term payback expectations.
A large number of private business owners would take a business risk (91%) [...]
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