#3: Handbook on Business Valuation for Business Owners

EBITDA, Enterprise Value and Enterprise Value Multiples

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In this post, we look at what are called total capital, or enterprise-level earnings indications like Earnings Before Interest and Taxes (EBIT) and Earnings Before Interest, Taxes, Depreciation and Amortization (EBIDTA). In addition, we will look at EBIT and EBITDA multiples to see how they compare with equity-based multiples like the net income and pre-tax earnings multiples.

#2: Handbook on Business Valuation for Business Owners

The Gordon Model and Equity-Based Multiples

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In the last post, we talked about the basic valuation equation. This equation is derived from something called the Gordon Model (and a couple of other names). We said before that valuation is a combination of art and science. It is time for a bit of the science. We’ll introduce a few equations in support of the basic valuation equation, so don’t let this bother you. After we see the “science” underlying this equation and understand a few more things about valuation, we can talk about more interesting questions.

#1: Handbook on Business Valuation for Business Owners

Value is [Not] Easy and Fair Market Value

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While the basic valuation equation is simplistic, business valuation is not as easy as the equation may suggest. In this post we discuss some of the basics and how it intersects with fair market value, a prevalent standard of value that business owners are commonly required (or find desirable) to obtain in their normal course of business.

Trump’s Proposed Corporate Tax Cuts and Private Company Values

Will EBITDA Multiples Increase 25%?

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With the election of Donald Trump as the 45th President of the United States, the stock market has rallied in what has come to be called the Trump Rally. The Trump Rally has been fueled in part by the anticipation of cuts in corporate taxes, which was a campaign and early-presidency goal. Something is happening with the multiples of earnings placed on public shares. So what is likely to happen to multiples for successful private companies if the Trump tax cut is implemented? Let’s take a look.

Two Personal Stories: Living with Margin and Being Marginless

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Would you rather live a life with margin or one of being marginless? I’ve always worked on one or more of the important areas of life where margin is needed: personal finances, work, physical conditioning, spiritual life, emotional, and time. Seldom do I hit on all cylinders at the same time. But I keep trying.

What My Father Taught Me About Margin in Life

And a Few Other Thoughts as Well

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I’ve been thinking about the meaning of a simple word, margin, in our lives. Last week, I wrote the first in what will be a series of posts on this topic. It was titled Do You Have Margin in the Important Areas of Your Life? And so we continue a discussion of the concept of margin in life, this time, focusing on early lessons from my father.

Would You Rather Drive a Tesla or a Ford?

Which Stock Would You Rather Own?

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In mid-2015, I commented on the apparent anomaly of a financing round for Uber that had an implied market value of equity (MVE) in excess of that of FedEx (FDX). At the time, Uber’s implied MVE was $51 billion, and that of FedEx was $48 billion. My post addressed some of the issues that I saw at the time. Similarly, last week, I read an article in the Wall Street Journal titled “Tesla, on a Hot Streak, Passes Ford in Investor Value”. That caught my attention, because Tesla is young and quite small and Ford is 100 years old and quite large. Why then does Tesla have such a high valuation?

Interim Time: The Time Between Now and a Future Sale of a Business

Use Interim Time Wisely to Prepare Businesses and Owners for Ultimate Sale

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Is business ownership a binary thing? Do we either own our businesses or not? The binary notion leads business owners to think either in terms of the status quo or of an eventual sale of the business. The truth is that between the two bookends of status quo and an eventual third-party sale are many possibilities for creating shareholder liquidity and diversification and facilitating both ownership and management transition

Do You Have Margin in the Important Areas of Your Life?

If Not, It is Time to Think About Building Margins before you are Marginless

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We live life now, at the margin between the past and the future. What we do at this margin impacts our futures. What we have done or have not done in the past influences, or creates, the options we have now in our lives, or at the margins. In other words, the margins that we create in various areas of our lives impact or influence what we can, will, or won’t do each day.

Thinking About Selling Your Business? Don’t Wait to Fix Your Buy-Sell Agreement

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The story in this post represents a composite from recent discussions with clients revolving around the question – “If a sale in the foreseeable future is a possibility, should you bother to be sure that your buy-sell agreement is in good working order?”