Business owner contemplating the value of his business

Your Business may not be Worth as Much as you Think it is … Yet

Do you know how much your business is worth? And by worth, I mean what price it would realize if it was for sale today. Many times small business owners think their business is worth more than it currently is. This is often referred to as the value gap. If your business represents a significant part of the funding for your retirement, you will want to determine the amount of this gap sooner rather than later. …

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COVID-19 Impact on Business Valuation in the Case of Family Law

What is the Impact of COVID-19 In the Case of Family Law On Your Business Valuation?

I recently had the opportunity to attend a Webinar hosted by the American Society of Appraisers (ASA) that discussed the impact COVID-19 is having on business valuations.  The panelists included ASA’s, ABV’s, CBV’s and CFA’s and one of the most discussed topics was the impact the valuation date can have on business valuations, due to the uncertainty caused by the COVID-19 crisis. How is the valuation date determined for Family Law? The underlying concept of …

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Creating a Profitable Retirement Outlook for your Restaurant

How to Create a Profitable Retirement Outlook for Your Restaurant

It seems odd that a business owner would work his or her whole life on their business and then determine the business’s value based on what they “think “the business is worth, or an industry rule of thumb. If the sale of your business is going to fund your retirement you should know what your business is worth. Mr. Jones, A Quick Service Restaurant owner, has determined (based on industry rules of thumb, and conversations …

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A Buy/Sell Clause Helps Prevent Business Divorces from Getting Messy

Business partners set up shop with the best of intentions. It’s a relationship that must be built on mutual trust and respect. But no matter how strong a personal or professional relationship is at the outset, shareholder conflicts and other events may occur that can affect the continuity of the business operations. A mechanism and process that establishes the ground rules for the orderly transfer of the businesses shares caused by unforeseen conflicts or events …

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Business Valuation

Why Knowing the Purpose of the Valuation Engagement is Important

There are many reasons why you may need to determine the value of your business. Some of the more common examples are marital dissolution, litigation and ownership disputes, buy/sell agreements, business and estate planning, and gift and tax planning purposes. Examples of the common users of a valuation report are the company shareholders, potential purchasers, the Courts and the Canada Revenue Agency (“CRA”). A valuation report prepared for one purpose is not necessarily appropriate for …

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Reasonable Compensation

Reasonable Compensation

One of the most subjective and discretionary expenses for many small closely held businesses or professional practices is owner compensation. Reasonable compensation is a key assumption in the valuation model as it can have the most impact on the profits of the closely held business. This is due to the fact that compensation recorded in the Company’s books and records and presented in the financial statements is not always at market rates and it is …

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Importance of a Buy/Sell Agreement

Importance of a ShareHolder Buy/Sell Agreement

Business partners set up shop with the best of intentions. But no matter how strong a personal or professional relationship is at the outset, shareholder conflicts and other events may occur that can affect the continuity of the business operations. A buy/sell clause in the shareholder agreement that is understood by all the parties is an important tool that provides a mechanism and process to ensure an orderly transfer and the continuity of the business …

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