Small simple Valuations $1,000 to $2,000
Larger more complicated Valuations $2,500 to $5,000
|WE WIN IN COURT|
Need a Bulletproof Business Valuation?
"I greatly appreciate the work Eric did on the Valuation of my company. It stood up in court. (April 2017) The Judge soundly admonished the Chartered Business Valuator who tried to contradict Eric's valuation. If someone needs confirmation and wants to speak to me, Eric has permission to release my number." (Julian)
Second Opinion on a Questionable Valuation?
"We find that most small business valuators concentrate on Asset, Market, and Income approaches developed in the 1970’s. These are generally easy to defeat in 2017 as most businesses are now made up of 50% or more in “intangible assets” these valuators neglect, or have no means, to properly measure.
FACTORS AFFECTING VALUE
Key Point: Business Valuation is about "measurement of value" and not an "accounting exercise"
If someone is presenting or proposing a valuation without taking these 25 factors into consideration; the valuation number is likely to be misleading and almost certainly “not accurate” for a small business.
Some of our files from 2016:
Multi Million Dollar Distribution Business - Valuation for purpose of sale.
Plumbing and Gas Business - Valuation for purpose of divorce proceedings.
Multi Million Dollar eco tour business - Valuation for purpose of expansion loan.
Law Practice - Valuation for purpose of sale.
Lawn and Yard Maintenance business - Valuation for purpose of divorce proceedings.
Art Studio Franchise - Valuation for accounting purposes and CRA requirements.
Plumbing Business - Valuation for purpose of divorce proceedings.
Irrigation and Snow Removal Business - Valuation for purpose of divorce proceedings.
Large Retail Bakery - Valuation for purpose of sale to employee over 5 years.
Software Distribution rights in Canada - For Australian Parent Company (agency dispute.)
Janitorial Supply Business - Valuation for purpose of partnership dispute.
Tree Pruning and Lawn Business - Valuation for purpose of sale.
Battery Distribution Business - Valuation for purpose of sale.
Software Testing and Quality Assurance Company - Valuation for purpose of partnership dispute.
Blind Mfg. and Installation Company - Valuation for purpose of legal action in partnership dispute. This went to court on May 27, 2016 and resulted in our client receiving over 80% of the amount he sued for. Client is available as a reference.
Classic Car Renovation Business - Valuation for multi-million dollar lawsuit in Florida launched by Canadian partners.
Dance Studio - Valuation for purpose of establishing value for pending sale.
Cross fit GYM - Valuation for purpose of establishing a viable price for buyer to offer.
Jim’s Burger location in US - Valuation for purpose of divorce proceeding.
Two wholesale bakeries - purpose of the valuation was to find values so the companies could merge.
Sign Manufacturing Business - Valuation for purpose of a minority shareholder leaving company.
Landscaping and Excavating Company - Valuation for purpose of divorce.
Day Care Facility - Valuation to support litigation and negotiation for damages inflicted by City in zoning error.
Accommodation Business - Valuation for purpose of sale
Smoker Operation (8 pigs at a time in size) Valuation for tax purposes.
Flooring Business - Valuation for purpose of sale
Retail Wine Business (Franchise concept) - Valuation for purpose of sale
Prop Business - Valuation for purpose of Partnership Buyout
Computer Retail - Valuation for purpose of potential purchase
Music Composer Business (original soundtracks for documentary movies and videos) - Valuation for purpose of divorce proceedings.
Two Pharmacy Locations - Valuation for purpose of sale consideration.
Luxury Bed and Breakfast combined with Events Business - valuation for the purpose of sale.
Pool Building Company - Valuation for purpose of sale to family.
Automotive Related Business - Valuation for purpose of sale.
Specialized Manufacturing Firm within Printing Industry - Valuation necessary as someone expressed interest in purchase.
Daycare - Valuation for purpose of possible sale. (Interested Purchaser came forward)
Focused Builder - Valuation for purpose of establishing value for employee buy in.
Software maintenance contractors - Valuation for purpose of possible merger. (many millions of dollars)
Chiropractic Practice - Valuation for purpose of buy in.
Wholesale Food Business - Valuation for purpose of settling partnership dispute.
Accounting firm - Valuation for purpose of divorce
Call Centre - Valuation for internal purposes
Hair Salon - Valuation for purpose of employee buy in
Convenience Store and Gas - Valuation for purpose of lease dispute
Specialized Builder of Restaurants - Valuation for purpose of employee buy in.
Wholesale Food Mfg and Distribution - Valuation for purpose of partnership buyout.
My niche is Small Business Valuations with special expertise in understanding "intangible assets" that are often missed as they don't show up on the Balance Sheet or Statements of Profit and Loss. In addition to Financial Statements I take into account; Processes, Procedures, Knowledge Base of Owner and Employees, Internet Presence and Use, Documentation and Risk. This is what makes our method different and we believe more accurate than traditional valuation models.
(1) Why: What is the purpose of the valuation?
(2) Who: Value with whom owning and managing the business?
(3) Normalized Net Income: I must understand what questions to ask to be able to determine the real 'Normalized Net Income.' This figure is seldom what you see in your year-end accounting, which is generally calculated to determine the lowest amount of tax legally payable.
(4) Leasehold Improvements: These need to be covered regardless of whether the building is leased or owned.
It is important that the right questions are asked in any comprehensive appraisal.
(5) Hard Assets: Determining fair market value.
Book value means nothing if we want to know the true value of the business.
(6) Intellectual Property: Copyright, Proprietary Processes, Business Operation Manuals. These are your operating manuals; the step by step instructions on how to run your business and how to train others to operate your business. This greatly affects value; positively if it you have them and negatively if you don’t have them, and much more negative if it would not be possible for you to have a practical manual that would allow for your business to continue if you were unable to function.
(7) Value of Cash Flow: This is calculated by finding the normalized net income then multiplying it by a ratio determined by risk, opportunity, and the intellectual property affecting the means to produce.
(8) Soft Assets: Do you have intellectual property that has fair market cash value outside of your business?
(9) Risk: What are the possible risks to your business?
No appraisal can be completed without properly understanding risk.
(8) Value of Cash Flow: This is calculated by finding the normalized net income then multiplying it by a ratio determined by risk, opportunity, and the intellectual property affecting the means to produce the cash flow.
Your valuation report will be delivered to you approximately one week from the time we receive the financials, but could be prepared in as little as 48 hours in extreme circumstances.
As you can well understand, no computer program, gross sales or other rule of thumb guessing techniques are going to be helpful for you in determining the real value of your business. In fact, these techniques could harm you. Valuation and appraisal is our full time business.
|CPPA Accredited Business Valuations and Appraisals 1-800-606-0310
Our Firm of Business Valuators and Appraisers and Support Team
|Eric Jordan, CPPA - Our Founder
Specializing in small business valuations with intangible assets and intellectual property. Your business is more than just the numbers.
|Ken Locke, CPPA
Specializing in restaurant equipment appraisals.
Web design and office/sales support.
|Robert Knezacek, CPPA
Research Director; working on Commerce degree; enrolled (student) in the Chartered Business Valuator program.
|Financials||Physical Location||Client Base||Comparable Sales|
|Return on Investment (ROI)||COMMON FACTORS AFFECTING VALUE:
The most important things to understand are NORMALIZED NET INCOME and RETURN ON INVESTMENT after all payments, including wages to owners, are adjusted to reflect fair market value. Larger businesses are different from small businesses and terms that are acceptable for larger operations are often inaccurate for small businesses. EBITA is a commonly used term but is misleading in determining the true return on investment for a small business. Don't be mislead by those suggesting owners wages are part of the profit of a business. True Return on Investment calculations must be made AFTER owners are paid at fair market rates. There are other misleading terms often used, which is why following CPPA Accreditation Standards and procedures is best suited for Small Business Valuations. We are also USPAP compliant (Universal Standards for Professional Appraisal Practices.) When standards are not followed, undocumented mortgages being sold as securities and the Enron fiasco result.