by Holly Magister, CPA, CFP® | Business Valuation, Exit Planning, Sell a Business |
Many business owners are uncertain about how to establish a value for their business, regardless of its stage of development. How to value ideas, start-ups and mature businesses differ greatly. Learn more.
by Holly Magister, CPA, CFP® | Business Capital, Grow a Business |
Up until now, the PPP Loan proceeds for Schedule C filers was based on the 2019 net profit (referred to as the net earnings from self employment) plus payroll costs if employees worked in the business. The Interim Final Rule (IFR) effective on March 3, 2021 allows a business owner to use either their gross income or net income as the basis to compute its PPP Loan request amount.
by Neal Isaacs, MBA, CBI, CM&AP | Business Valuation, Exit Planning, Grow a Business, Sell a Business |
Doing deals can be expensive. A lot of entrepreneurs want to save money by not hiring an advisor or they don’t know when they should make the investment on an advisor. It’s important to understand the roles of the broker and other advisors, especially legal counsel, and to know when to bring in a professional. Here are some milestones in a deal, and how to know when to hire a business advisor.
by Neal Isaacs, MBA, CBI, CM&AP | Business Valuation, Exit Planning, Sell a Business |
A Broker’s Opinion of Value, or BOV, can help an owner determine what the business would sell for on the open market. This, in relation to an owner’s “pain” level, are often enough to make a decision if they are ready to sell.
by Holly Magister, CPA, CFP® | Business Valuation, Grow a Business, Trepopedia |
v Have a Question? Add it to the bottom of this post! For many entrepreneurs, launching a new business often means walking a fine line between pursuing earnings growth and growing the top-line revenue. A business can’t be successful in the long-term without earning a... 
by Holly Magister, CPA, CFP® | Business Valuation, Sell a Business, Trepopedia |
v Have a Question? Add it to the bottom of this post! When a business is sold, sometimes an adjustment to the purchase price is needed to make up any difference between available working capital at the time of closing, and the working capital needed to maintain... 
by Holly Magister, CPA, CFP® | Sell a Business |
There are many ways to compute the value of a business, and an equal number of differing opinions regarding a particular methodology’s relevance to an entrepreneur who starts and grows a viable business. But what seems to truly matter most to the entrepreneur who has... 
by Holly Magister, CPA, CFP® | Business Capital, Grow a Business |
Sufficient cash, otherwise known as business capital, is necessary for any business to pay vendors and employees on time and to invest in real and intangible assets that enable growth. That’s why, as a business owner, it’s critical to understand what business... 
by Holly Magister, CPA, CFP® | Business Valuation, Sell a Business |
EBITDA Margin and Adjusted EBITDA Margin are similar measurements used by business owners and others who value businesses for sale. Let’s break down the two terms to help your understand which measurement of profit and cash flow are most relevant for your... 
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
Book Value is defined as the total value of a company if it were to liquidate its assets and pay back its liabilities, or the value of the company according to the financial statement. Book value (BV) is also sometimes referred to as “shareholder’s equity.” Business... 
by Holly Magister, CPA, CFP® | Sell a Business, Trepopedia |
Have a Question? Ask your question below and one of our Advisors will answer. What is Invested Capital? MVIC (Market Value of Invested Capital) is the amount of money raised by issuing securities to shareholders and bondholders, and typically includes total debt and... 
by Holly Magister, CPA, CFP® | Grow a Business, Trepopedia |
The payback period for buying a business is defined as the amount of time it takes to recuperate an investment, or to reach a break even point. Generally, the payback period is expressed in years. All other factors held equal, a shorter payback period is more... 
by Holly Magister, CPA, CFP® | Grow a Business, Start a Business, Trepopedia |
The effective annual rate – also called the effective interest rate, the effective rate, or the annual equivalent rate – describes the amount of interest paid or earned on an investment or loan as the result of compounding over the period of a year or some... 
by Holly Magister, CPA, CFP® | Business Valuation, Grow a Business, Trepopedia |
Capitalization Rate, more commonly referred to as Cap Rate, is the rate of return on a real estate investment based on the income the property is expected to generate. In other words, the Capitalization Rate is used to estimate an investor’s likely return on... 
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
EBITDA Valuation is an industry multiple or ratio method that is used commonly to determine the Enterprise Value of a company operating in the lower-middle or middle market. It differs from the method typically used by small businesses (also referred to as Main... 
by Holly Magister, CPA, CFP® | Sell a Business, Trepopedia |
Seller’s Discretionary Cash Flow (SDCF), also sometimes referred to as seller’s discretionary income (SDI) or seller’s discretionary earnings (SDE), is a computation often used when valuing a small or medium-sized business. While larger, public companies are often... 
by Holly Magister, CPA, CFP® | Sell a Business, Trepopedia |
v Have a Question? Add it to the bottom of this post! Enterprise Value, also sometimes called “EV,” is a measure of a company’s total business value. EV is the theoretical price for a company if it were to be bought, and because EV accounts for a company’s debt and... 
by Holly Magister, CPA, CFP® | Business Valuation, Exit Planning, Sell a Business |
As a business owner journeys through entrepreneurship, it’s inevitable for most to seek a quick business valuation on one or more occasions. Such a conversation with a business advisor may be about the need to understand the value of the business for the purpose of... 
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
The term ‘rule of thumb’ generally refers to the idea of a principle with a broad application – something that is not intended to be exact or strictly accurate. In the business world, the term ‘rule of thumb’ refers to a guideline that provides simplified advice about... 
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business, Trepopedia |
Meaning ‘for the sake of form’, the term pro forma refers to a document that is often provided as a courtesy and satisfies predetermined minimum requirements in an effort to best predict the future outcome of a transaction within a business. One of the most common... 
by Holly Magister, CPA, CFP® | Sell a Business, Trepopedia |
The valuation multiple formulas available to compute the value of a business for sale are numerous and can be confusing to many small business owners. In fact, many professionals can be similarly confused by the various multiple formulas currently in use.
by Holly Magister, CPA, CFP® | Sell a Business |
When working through a business sale, an inordinate number of resources on both sides of the table are dedicated to drafting and negotiating the Stock Purchase or Asset Purchase Agreement. This is true especially in the last one-to-two weeks before the closing. In fact, I’ve had clients remark that during their entire tenure as an entrepreneur, they never spent as much time speaking to their advisors as they did during the last week of their business ownership journey!
by Holly Magister, CPA, CFP® | Sell a Business, Trepopedia |
Business Brokers and M&A Intermediaries may use or reference the ‘Lehman Scale’ when discussing their compensation method with a business owner contemplating the sale of their business. The Lehman Scale was originally developed in the late 1960’s and used by the Lehman Brothers when raising business capital for their clients.
by Holly Magister, CPA, CFP® | Business Capital, Grow a Business |
Many small business owners borrow money to start and grow their business. And is often the case those same business owners find themselves hitting credit limits established by banks and other lenders causing enormous growing pains for the business. Simply stated, running out of business capital when you’re growing a business is difficult at best.
![How to Calculate Debt Service Coverage Ratio [Tool]](https://b226520.smushcdn.com/226520/wp-content/uploads/2017/02/iStock-502733644.jpg?lossy=1&strip=1&webp=1)
by Holly Magister, CPA, CFP® | Business Capital, Grow a Business, Trepopedia |
Debt Service Coverage Ratio compliance often is required or necessitated by covenants in a bank loan agreement. A bank loan covenant regarding the debt service coverage ratio will specify the amount of income a business and/or its guarantor must generate relative to the debt principal and interest payments on an annual basis to remain in compliance with the covenant. The business owner, or his or her CFO or Controller, should monitor this ratio carefully on a monthly basis so the covenant is not unintentionally broken.
by Holly Magister, CPA, CFP® | Grow a Business, Sell a Business |
One of the many questions asked by entrepreneurs as they plan for the sale of their business is related to the Adjusted EBITDA definition.
by Andrew N. Jones | Sell a Business |
Most entrepreneurs build a business with a view to an eventual profitable exit. Most probably have lifestyle aspirations in mind that imply a certain amount of money to be realized from a sale. Whether they are looking at an exit now – or a decade from now – they need more than the subjective opinion of friends and acquaintances as to how much their business is worth.
by Holly Magister, CPA, CFP® | Business Capital, Grow a Business, Sell a Business, Trepopedia |
EBIT is an acronym for Earnings Before Interest and Taxes. This is a term Bankers often use as a measure of a business’s earnings from operations. The EBIT reveals operating profitability without non-recurring or unusual income or expenses.
by Holly Magister, CPA, CFP® | Business Valuation, Grow a Business, Sell a Business, Trepopedia |
EBITDA is an acronym for Earnings Before Interest Taxes Depreciation and Amortization. EBITDA is often used as a measure of a business’s cash flow. Also it is used frequently in many business valuation formulas, depending on the business’s specific industry.
by Holly Magister, CPA, CFP® | Grow a Business |
If you own a business, you want to know that your entrepreneurial efforts will result in making money. However, many entrepreneurs struggle to recognize where they are making money and where they are not!
by | Grow a Business, Sell a Business |
The various types of valuation reports produced by a business appraiser can be confusing to an entrepreneur, especially when the appraiser belongs to more than one valuation association. Under most appraisal standards, a business appraiser can produce two types of reports: a detailed appraisal report or a calculation report.
