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Business Valuation Specialists LLC

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Why Is Steel Mill Appraisal Important to Your Business' Bottom Line?

Posted by Business Valuation Specialists LLC on Apr 15, 2019 8:00:00 AM

Steel Mill Appraisal

You've worked in the steel industry for years. You know blast furnaces inside and out, and can tell the general history of steel prices for the past several years off the top of your head. Casting and rolling are daily occurrences, and you know exactly what's involved in keeping your continuous production machinery operating efficiently. But one area of your industry that you may not know about, but is vital to your company's bottom line, is steel mill appraisal. But what exactly is a steel mill valuation and why is it so important to your company's bottom line? Here's a look at the entire process and how it can be used as an important business tool to grow your company.

 

Why Is Steel Mill Appraisal Important to Your Business' Bottom Line?

The first question many people ask when determining the value of their company is, "What is a business appraisal?" Though many companies only have one performed when they're selling their business, a business appraisal can be a valuable tool to help improve your company, allowing you to reduce overhead, increase profitability and grow your business with a great deal of success. But what happens in a business appraisal that allows you to take advantage of the information inside to this degree?

Let's start by taking a look at the business appraiser. This is a highly-trained individual who has spent extensive time in the steel industry, not only with your business during the appraisal process, but with any number of competing businesses, who may have very different processes, procedures and circumstances than your company. This provides them with the knowledge to make valuable insights that can greatly benefit your company's bottom line.

As an example, let's consider the revolution currently taking place in IoT-linked machinery. Is it as prevalent as the machinery manufacturers say? If you upgrade, will you really be getting in at the beginning of the curve, making you an innovator in your industry, or will you be somewhere in the middle, keeping up with the pack. Is it really making as strong of differences in your operation and profitability as the machinery manufacturers are saying? A qualified appraiser can let you know.

What about your finances? Are they in line with other steel mills? One of the first areas considered by a business valuation specialist is a company's financial records and where they may be accurate or inaccurate. Once adjustments have been made, they may be able to advise you whether there are areas that could be improved.

Though a steel mill appraisal can be a complex process, working with the right business valuation specialist makes the process flow much more smoothly and easily. It's also a vital one that can give you the information you need to make significant improvements to your company, such as deciding when to expand, when to consolidate and when to sell. It provides you with vital proof of your company's value for a wide range of purposes. However, these benefits are often only apparent when you work with the right appraiser. A certified business valuation specialist has the right combination of knowledge, experience and expertise to get your company's value calculated correctly and in a fashion that makes the final report bear up well to very strong scrutiny from a wide range of sources.

Tags: Steel Mill Appraisal

What's Involved in the Business Franchise Appraisal Process?

Posted by Business Valuation Specialists LLC on Apr 1, 2019 8:00:00 AM

franchise appraisal

There are some strong benefits to buying a franchise business. Your company automatically has name recognition with the national chain, some amount of marketing is already happening and you have support from other businesses like yours around the region or country. However, business franchise appraisal can have some significant differences compared to regular companies, which can impact the process of having your company appraised. Here's a solid look at what is typically involved in the process of franchise business valuation.

What's Involved in the Business Franchise Appraisal Process?

Business appraisal looks at a variety of information about a business to determine value. Generally speaking, this includes a solid look at your company's finances, its market share, the goodwill it holds in the community or industry, its reputation for innovation, your brand value and several other characteristics that make up the value of the company as a whole. However, a franchise splits many of these aspects with a national brand, making it difficult to determine what portion of the company's value belongs to the company itself versus that which is part of the national brand. This creates a number of issues with the process of appraising a franchise.

The first unique issue that is often come across in the process of appraising a franchise is the franchise agreement itself. These agreements can include or disallow a wide range of products, services, branding and materials that can either boost your business or leave you working on your own. This can have a strong impact on your company's overall value and must be carefully considered. How high is your royalty and advertising allowance?

The assignment of particular regions for a franchise must also be taken into account. Do you still have room for growth in your allotted region or is your market saturated? If there's room for growth, you can grow your overall company value by reaching out into new areas that you may not have tapped before. If there isn't, you'll need to explore new markets and sectors to break into in order to achieve any significant growth with your company.

What about your rights to sell your franchise? Some franchises are very tight in disallowing the sale of a franchise business to a third party in any fashion. In other circumstances, you may need to get franchise approval before making a sale, whether it's to vet the incoming owner or simply control the market more tightly. That doesn't mean you can't have a valuation performed in the event of a partnership or marital dissolution, making estate plans, dealing with tax agencies or similar circumstances. It does, however, create some unique circumstances that must be taken into account in the process.

Your franchise business is unique, but its approach to the market requires some special steps be taken in the valuation process. Though business franchise appraisal can seem like a complicated process, it actually has a set of logical calculations to come up with an accurate value for your company. However, this process is best completed by a certified business valuation specialist who has had the training to understand the fine nuances that can mean the difference in thousands of dollars of value for your company. Be sure to ask about your appraiser's qualifications prior to hiring them for the process to ensure your investment is well-spent and provides quality results.

Tags: Franchise Appraisal

How Does the Valuation of Partnership Buyout Help Both Sides in a Dissolution?

Posted by Business Valuation Specialists LLC on Mar 22, 2019 8:00:00 AM

 

partnership buyout business appraisal

When you're dealing with the dissolution of a partnership, there are any number of issues that you need to deal with over the situation. However, one option you have to help deal with determining the value of the leaving partner's share in the business will help you through the process more easily. By getting the valuation of partnership buyout calculated by a professional business valuation specialist, you can focus on more important parts of the dissolution process, such as allocating duties and clients of the departing partner. 

 

How Does the Valuation of Partnership Buyout Help Both Sides in a Dissolution?

A partnership dissolution is a difficult process. Duties must be reassigned across the entire enterprise in a way that makes it possible to continue operations as seamlessly as possible. Clients must be contacted and moved on to other partners in a fashion that keeps them happy with the process. Their specific responsibilities of that partner must be audited for any number of issues that may have arisen over the years of operation. Any changes in staffing that needs to happen with the change of partners should be addressed before the partner leaves the firm.

Another area, one that is often the most contested during a partnership dissolution, is the value of the business and the value of that partner's buyout. The partner who is leaving may have invested significant time, effort and energy into the overall process of building up the business. They may have brought business to the company when they joined or built it up through their reputation for innovation or excellence. It can be a very difficult process to determine what that portion of the company's value should be allotted to that partner.

What's more, a partner who is leaving a company may feel that they deserve a reward, after a fashion, for all of their hard work. However, the remaining partners may feel that this is unfair to the remaining partners who are continuing to stay with the business in the future, and a fair distribution of the company's value requires that all parties be treated fairly. Additionally, there could be any number of other factors that have shifted the estimated value of the company over the years.

For this reason, having a partnership buyout valued provides that fair value for your business partners. It allows a third party to independently determine the overall value of your business as well as the departing partner's share in the business. It gives you the opportunity to get past the point of bickering over the potential value of the business and who is owed what in favor of fair market value. This value is determined by a trained, experienced professional who will be using methodologies that have been in place for decades in years of testing across many situations.

By having a valuation of partnership buyout performed, many companies are able to more easily get through the process of a partnership dissolution by avoiding problematic issues surrounding business value. However, if you want to ensure that you don't have to repeat the process, make sure that the calculations are performed by a certified business valuation specialist. This ensures that the report they generate follows established, tested methodologies that have been carefully developed over the years.

Tags: Partnership Buyout Business Appraisal

A Business Owner's Guide to Selling a Business in 2019

Posted by Business Valuation Specialists LLC on Mar 8, 2019 8:00:00 AM

business_sale_valuation

If you're considering selling a business in 2019, have you considered all the factors that come into play in maximizing your profit? If you've put years of equity and your own personal effort into building a company, isn't it worth putting a little more effort in this year to make sure you're getting everything it's worth? This guide will help you make the most of your business sale by showing you how to go about that process to ensure you're getting everything you can from your business.

A Business Owner's Guide to Selling a Business in 2019

  • Consider why you're selling. Are you selling because you're in a desperate situation with your company? If you are, it may not be the best time to sell to maximize your value. Consider alternatives such as bringing in fresh talent to turn the business around or provide additional support while you work through a health crisis or family issues. This may make it easier to keep your business and make it profitable again.
  • Start the sale process by getting your paperwork in order. Is your bookkeeping up to date and accurate? Are your assets accurately portrayed in terms of value in your books? Do you need to update other documentation, such as who is in charge of which portions of your business or your business processes in your manual? Make sure that this paperwork is up to date and ready for any potential buyers.
  • Deal with any obvious problem areas. If you have a large portion of bad debts, consider calling them in, writing them off or using an outside agency to collect on them. Do you have old equipment lying around that needs to go? Get it sold first. Only when you've dealt with these issues is it time to consider talking to a professional.
  • Have a business valuation performed to find hidden value potential. When you work with a business valuation specialist, they prepare a report that includes areas where your company is strong and where it is weak. Make sure you work with a certified valuation specialist to ensure the accuracy of the information.
  • Improve the areas recommended on the report. Once you've received the report and have clarified any areas where it may be inaccurate, start acting on the areas where your company is weak to improve them and solidify the areas where it is strong to retain the value they provide to your bottom line.
  • Get a secondary business valuation report prepared. Once the improvements are made, have a secondary report developed so that you can make sure you've maximized your company's potential value. It's only at this point that you should ask for recommendations for a reliable, reputable broker and interview the best to find the right fit. 

By taking the time to go through these steps, you can ensure that selling a business in 2019 is as painless a process as possible while maximizing your company's potential for profitability in the sale. Don't assume that simply listing your company for sale with no further preparation is in your best interests, but use the advice of a certified business valuation specialist to make improvements that will have a real impact on your final sale price.

Tags: Business Sale Valuation

What's Different When Valuing a Printing Company?

Posted by Business Valuation Specialists LLC on Feb 22, 2019 8:00:00 AM

Valuing a Printing Business

 

Every day, businesses are appraised to determine their value for a wide range of purposes. However, valuing a printing company can be a very different situation, because they have a number of aspects that are different from other businesses. These factors can make a huge difference in the final value that is determined in your company. But what are these factors and how do they impact your company's overall value? Here's a quick look at the overall process and what factors are different.

 

What's Different When Valuing a Printing Company?

  • No two printing businesses are the same. For that reason, it's important that all of the aspects of your business be carefully considered by the business valuation specialist before they can calculate the value of your company. This process takes a certain amount of time while every factor is considered, including market share, annual income trends, innovations within the company, community goodwill and much more.
  • Smaller printing companies with a solid, defensible niche may see a higher level of profitability due to that level of specialization. This is quite often reflected in an overall higher value, but other factors will come into play when the total value of the business is calculated by the valuation specialist.
  • What's the size of your printing business? Generally speaking, larger commercial printers tend to have a much higher calculated value because they take on larger jobs, have a lower overhead cost, are able to procure supplies and equipment at lower costs and have a larger production turnaround on an annual basis.
  • Printing companies tend to hold a higher value because they have a higher amount of profitability over time. Printing companies with profitability between 10-15% tend to be valued at higher rates because this level of profitability is considered desirable by prospective business owners, making them more likely to spend more to acquire a printing business than similar service companies.
  • What is your printing company's industry segment? At current, lithographic printing companies make up the largest segment of the market and still have good growth prospects. However, that doesn't mean you should turn your back on digital printing, a segment of the industry that is seeing strong growth as more and more businesses push towards digitization and more flexible operations.
  • Because of the strong need for printing services, printing companies have a low customer concentration. This means that you probably have a large number of smaller clients, rather than a few large clients. This particular makeup, specifically focusing on having no more than 10% of your total revenue tied up in your top five customers, helps to maximize your overall business value. If one or two clients have a rough year, the others take up the slack.

As you can see, there are a wide range of differences when valuing a printing company that must be taken into account when trying to determine that business' value. When you work with an appraiser to determine your printing company's value, you need to make sure that the appraiser knows their business. Working with a certified business valuation specialist ensures that the appraiser has the experience, expertise and knowledge to get the job done correctly the first time, using practical calculations that have been developed through practical methodologies and tested in a wide range of situations.

Tags: Valuing a Printing Company

The Craftsmanship Involved in Valuing a Craft Brewery

Posted by Business Valuation Specialists LLC on Feb 11, 2019 8:00:00 AM

Craft Brewery

When your business is brewing, it's easy for your daily operation to take you away from considering the value of your business. But valuing a craft brewery is a difficult process at best, one that involves art, science and a certain amount of craftsmanship. But exactly how is a craft brewery different than other types of businesses and how will those factors impact your bottom line when you're dealing with a tax agency, court case or selling your company? Here's an in-depth look at the process and how microbreweries are different than other businesses.

The Craftsmanship Involved in Valuing a Craft Brewery

Microbreweries have been showing up more and more recently, with the paradigm shift in our society placing more value on quality over quantity. This shift has brought these types of food service businesses into the limelight and made them popular in terms of both market share as well as value. This is among the reasons why it's vital that when you have your craft brewery valued that you use a certified business appraisal specialist to handle the process.

Think about it for a minute. Restaurants have been around for centuries, so determining value is fairly straightforward, though it can still be miscalculated by the average real estate agent or other individual who has not been through the stringent training process that certified appraisers have been through. However, microbreweries are a newer iteration in the industry. The various factors that will impact their value are still being determined to a certain extent, and only business valuation specialists who go through training and updated education to stay on top of these factors are able to provide an accurate valuation of your business.

Among the aspects that are impacting craft brewery values are intangible assets. These are specific aspects of a business that do not have a direct, tangible value, such as a table or brewing vat, but value which is built on reputation, goodwill and similar aspects. Think about when you last went to a really great microbrewery. You'd probably heard something about it in the area from locals or saw an article about it that caught your attention. Maybe the brewery had a great award for a specific brew.

It could also be that the brewery has done a lot in the community to build up charitable organizations and volunteer groups. There are any number of other ways that a craft brewery increases its intangible assets and value. However, this is a difficult value for many individuals to calculate, especially given the complexity of the process involved. How do you put a figure on the hoppy flavor of an IPA? What's the value of that best in class ribbon hanging on the wall? Working with an experienced business appraiser is the best way to work out the value of these intangible assets.

Your microbrewery is as unique and creative as you are, and that reputation deserves to receive a fair value when you're working on the business side of your company. Valuing a craft brewery is a difficult process, one that requires careful attention to detail and solid experience with both the industry as well as the nuances of the business itself. Be sure that the appraiser you're trusting the process to is certified to ensure they have the needed knowledge to calculate an accurate value for your business.

Tags: Valuing a Craft Brewery

Avoiding the .com Issue: Valuing an Ecommerce Company

Posted by Business Valuation Specialists LLC on Feb 1, 2019 8:05:00 AM

Valuing an eCommerce Company

When you're considering investing in a tech company, it's easy to get caught up in all the hype with the latest and greatest being pushed by the company. But when you're not familiar with all the specifics, how do you know whether you're really buying the next Apple, Microsoft, Evernote or Intuit or if you're just throwing your money at the next big bust? This was the problem faced when the .com bust took place not that long ago. Fortunately, there's one way to help make sure you're making a smarter investment - by valuing an ecommerce company with a certified appraiser. Here's why it makes the difference.

 

Avoiding the .com Issue: Valuing an Ecommerce Company

Today, digitization and tech are taking center stage because of their potential for transforming our society as a whole. However, that doesn't mean that every tech company is a solid investment. To get an idea of where companies sometimes fall short of their hype, we're going to take a few minutes to look at the past - specifically, the .com bust that happened in the late 1990s. As the internet began to grow significantly in popularity and more companies began selling their products online, the companies that incubated this boom became very popular, and tech companies specifically suddenly found themselves with a lot of eager investors knocking at their doors, investors who often didn't understand what the company did or whether it had a solid plan in place for success.

As the market grew, these companies would spend ridiculous sums of money on fancy office furniture that was far more than was needed for their situation, executives were paid huge bonuses and amazing presentations were made on the company's potential, but in the end, the young leadership was often unable to anticipate many of the issues that came up due to competition, a quickly expanding market or changing conditions that made it difficult to adapt. Because these companies didn't take the time to build solid value, their investors were left with very little when they folded, causing huge shakeups in the market.

Today's digitization trends have investors in a similar quandary. Companies pushing IoT, mobile, cloud computing, automation and so much more are tooting their own horns to gain ground in the market. But unlike the .com bust, there's a better option than simply taking the company at its own word to determine its actual value and potential. The past several decades of digital business have provided significant data towards determining the actual value of a company and what aspects of that company to consider when trying to determine that company's value, both current and future. By having a solid business valuation performed, you'll have all the information you need to make an intelligent decision.

Instead of risking throwing good money away on a bad investment in a tech company that talks big but is short on details, using a certified business appraisal specialist for valuing an ecommerce is a great way to ensure that you're making a wise investment. However, make sure that the business valuation specialist has both experience in working with tech companies as well as a solid certification. Why? The certification process teaches the appraiser to use standardized methodologies that have been tested for decades in legal, financial and tax industries, providing you with solid reliable results that you can take to the bank.

Tags: Valuing an eCommerce Company

Why Should You Get an Appraisal for Tax Purposes?

Posted by Business Valuation Specialists LLC on Jan 18, 2019 2:12:33 PM

Appraisal for Tax Purposes

<p>When your company is dealing with tax issues, there is any number of issues that may come up. Using the right schedules, withholding the right amounts, making the right deadlines are all among them. But sometimes it's vital that you be able to prove the value of your business beyond a reasonable doubt to a tax agency. When this happens, it's vital that you get a business appraisal for tax purposes. Here's why:</p>

<h1>Why Should You Get an Appraisal for Tax Purposes?</h1>

<ul>
<li>Starting with an accurate business value. When you purchase a business, what's it really worth? If you bought into a company that was overpriced but potentially an okay deal at the time because market conditions said you'd clear the excess eventually, or if it was bought at a song during a slump in the economy, how do you prove the actual value? A business valuation helps to prove what the company is actually worth beyond the purchase price.</li>
<li>Fighting bad tax assessment. We've all known someone who received one - a tax assessment that was so far out of line as to be ridiculous. One contractor told the story of how his warehouse had been assessed at such a high rate, he could have torn it down and rebuilt it twice for what they were assessing it at. A business valuation helps fight bad tax assessments with solid documentation.</li>
<li>Adjusting value for market conditions. Has your industry gone into a bull or bear cycle lately? If it has, it may have affected your company's value significantly, either to the positive or negative. But how do you calculate those changes in value? When you have a business valuation performed, you can then adjust the value of your business in your books to account for these conditions, which will hold up with tax agencies.</li>
<li>Providing proof of value for an audit of past years. Sure, the IRS thinks you have a mistake on your books from 2008, but was your company really worth that much at that point in the recession anyway? If you didn't adjust your books at the time, a business valuation specialist can go back and make adjustments to reflect your company's actual value in the past while providing quality documentation with tested methodologies&nbsp;for your records.</li>
<li>Proving changes in value in the future. You hope your company will be worth more in the future, but by how much? When you have a quality business valuation performed by a certified business appraiser as part of a series of valuations, it's very easy to document your current business' value so that you have a solid basis to judge change in value over the years. This allows you to adjust your books accordingly and get a big picture of what different decisions have done to shift value for your business.</li>
</ul>

<p>Your business needs protection, often from the same government agencies that are ready to overreach their authority and expertise in a wide range of issues. Getting a business appraisal for tax purposes helps you control your company's tax liability when an inaccurate assessment or estimate of value is made by the tax agency. However, the appraisal report only holds up when it's been prepared by a certified business valuation specialist, giving you the benefit of tested methodologies to back up your valuation.</p>

Tags: Appraisal for Tax Purposes

Keys to Understanding the Market Approach in Business Valuations

Posted by Business Valuation Specialists LLC on Dec 27, 2018 1:57:00 PM

understanding the market approach

Whether you're a seasoned pro at having your business appraised or are just considering having your first business valuation performed, there are any number of terms that show up during the process that can be confusing. One of those is market approach. Used to define the type of calculations that are used in determining the value of a business, this approach uses a range of information from publicly traded companies to provide a baseline which is then adjusted to your company's specific situation. Here's a quick look at this type of valuation approach and the key aspects you need to understand to get the most out of it. 

Keys to Understanding the Market Approach in Business Valuations

  • Based on the principle of substitution, market approaches to valuation uses a recently sold similar public company and bases the final value of the appraised company against the public company's sale price. The business appraiser identified a good match, then compares the businesses to calculate your company's value as an equally desirable business from the aspect of ownership or investment.
  • There are several common methods used to determine business value using this approach. The Guideline Public Company Method, which looks across the board at all the aspects of a publicly traded company that has recently sold, then adjusts those aspects to match the company that is being valued.
  • The Multiple of Discretionary Earnings Method uses discretionary earnings as the yardstick against which the company to be valued is compared. It uses privately held companies versus public companies as the businesses are usually smaller in size.
  • The Gross Revenue Multiple Method takes a look at a company's gross revenues to determine value. This allows business owners to receive the benefit of future business income at the time of sale, an excellent option for retirees who are getting out of a lifelong business or an entrepreneur who is ready to move on.  Like the Multiple of Discretionary Earnings Method it uses privately held companies versus public companies as the businesses are usually smaller in size.
  • Generally speaking, market approaches are used most commonly when a company has been closely held for a number of years providing a guide for determining that value overall.

By understanding the key aspects of how market approach valuation works in a business appraisal, you can have a much better grasp of how your company's value is being calculated and what it means to your business. If you're ready to have a business appraisal performed, remember to only work with a certified business valuation specialist. This helps to ensure that the valuation report you receive is based on solid methodologies and accepted practices, giving you the best possible value for your investment.

Tags: Market Approach

Should you really worry about valuing a restaurant? Absolutely!

Posted by Business Valuation Specialists LLC on Dec 20, 2018 10:19:00 AM

valuing-a-restaurant-1

When you operate an eating establishment, it's easy to get lost in the daily rhythm of valuing a restaurant, thinking only of valuation when it's time to sell and even then only on the fringes of the process. However, valuing a restaurant should be a vital part of your operation, providing you with valuable insights into how your business is faring, what its value is and how you may improve it to improve that value overall. For these reasons and many more, you should seriously consider having a valuation performed on your eating establishment. Here are a few reasons why you should consider investing in a quality business valuation:

 

Should you really worry about valuing a restaurant? Absolutely!

  • Valuation provides you with a baseline of what your restaurant is worth. Should you take the local real estate agent's word on what your restaurant is worth or is there more to it than that? Often times, you'll get a much more thorough evaluation from a business appraiser. It takes into consideration a wide range of issues, such as your location, the overall market in the area, your competition, your reputation in the community, your future income and any number of other aspects that can be very complex in nature. This is something that most real estate agents don't always fully consider when presenting you with a potential asking price for your business.
  • Valuation gives you an idea of where you can improve your restaurant. How do you compare against competitors in your area? Are you losing business to that new Italian place down the street? How can you change your operation to improve your restaurant overall? Because a business valuation specialist who is focused on restaurants looks at businesses like yours all the time, they're able to quickly pick out where your company is strong and where it's weak. This gives you valuable insights into your business in the valuation report that allow you to take action to improve and grow your company.
  • Valuation helps you determine future income. Will you be able to count on your restaurant income when the kids go off to college and you need to pay tuition? If you don't know where your company is going and how to project your past and current business income into the future, that may be a difficult decision to make. Fortunately, the methodologies used in preparing a valuation report means you can not only get an idea of what that income will be, you can take it to the bank - literally. The standardized methodologies used in valuation reports are widely accepted by financial institutions because of their strong performance in the past.

When you're trying to keep your restaurant rolling on a daily basis, it's easy to overlook why valuing a restaurant can be so very important to your business' bottom line and long-term success. But before you have a valuation performed, make sure that you work with a certified business valuation specialist. This ensures that the money you spend will be well invested to create a solid valuation report that will hold up well in a wide range of circumstances that were discussed above, because the certification process ensures that the appraiser learns and uses standardized methodologies that have stood the test of time for many decades.

Tags: valuing a restaurant