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From the monthly archives: September 2014

We are pleased to present below all posts archived in 'September 2014'. If you still can't find what you are looking for, try using the search box.

The Best Time To Sell A Business Could be Right Now!

By Jim Stauder The Dow Jones closed at an all-time high on Friday, September 19, 2014. And the NASDAQ and S&P were within ¼ of 1% of their all-time highs. As a result, corporations, private equity groups, and individual investors are flush with cash – trillions of dollars. Where can they go with all that cash? Interest rates are so low that fixed income investments are not attractive. Whereas it’s typical to have a stock market correction (10% tumble) about once every 1 1/2 years, it’s been almost 3 years since the last correction. With international tensions in Ukraine, Russia, Iran and the Islamic radical group ISIS setting its sights on terrorizing the US economy, how much longer can the (stock market) good times last? Where can that cash best be used to achieve adequate returns on investment? The answer – business acquisitions. The buyer demand for good businesses with good cash flow has always exceeded the supply of good businesses available for acquisi ...

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Business Goodwill vs. Personal Goodwill & How They Impact The Sale Price Of Your Business

Let’s start by defining the word “goodwill,” in the context of valuing a business.  The fair market value of any business is made up of the value of tangible assets (inventory, accounts receivable, equipment, land and buildings, etc.) and the value of intangible assets (customer lists, brand awareness, proprietary processes, etc.).  Some intangible assets are specifically identifiable and can be valued; the rest make up “goodwill.”  In most business valuations, the amount by which the fair market value of the business exceeds the value of its tangible and identifiable intangible assets is considered “goodwill.” 
 
From a purchaser’s perspective, goodwill is the premium they are willing to pay for a particular business, rather than just buying the tangible assets directly and starting the business themselves.  It represents the investment they are willing to make to buy an existing business, based upon the incremental income and cash flow it generates over starting the same business from scratch.
 
Valuing goodwill is by far the most challenging aspect of determining the fair market value of any business.  And it generally makes up the majority of the difference between what a seller is hoping to be paid, and what a buyer is prepared to pay, for any business.

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