Do You Know What Your Business is Worth? with Melisa Silverman – 019

Shark Tank. Business Valuations. It’s the real deal.

Check out my podcast interview with Melisa Silverman from Avenue M Advisors.

She knows her shiz, especially in this environment. Listen in on some (chicken mc) nuggets on what you can do to make your biz worth wayyyy more than it is right now.

Our podcasts are interviews between Justin Krane, Krane Financial Solution’s President, and various professionals, one or more of which are or have been Krane Financial Solutions clients. However, nothing stated within the podcasts should be considered a testimonial or endorsement of Krane Financial Solutions or Justin Krane, and the professionals have not been directly or indirectly compensated for being interviewed.

Melisa Silverman is President of Avenue M® Advisors, Inc., a national, boutique financial valuation services company. She is also the Managing Partner of The Founders Group, a business succession and transition planning firm. With more than 20 years of industry, valuation and consulting experience, Ms. Silverman is a dedicated and impartial valuator and consultant who analyzes the numbers, uncovers the truth behind the numbers and tells the financial results of the business so that business owners can decide whether to grow their business or exit from the business.
**SCROLL TO THE BOTTOM FOR THE VIDEO!**

What is Valuation?

Business valuation is an opinion of the value of what a business is worth, performed by a professional who has the experience and the expertise to value that type of business.
The professional understands the market and how to put a value on that type of business.
Business owners should have a business valuation done to have your own independent idea of what your business is worth.
Most companies are composed of intangible assets that still have a lot of value, such as software, copyrights, patents and trade secrets.

Knowing What Your Business is Worth

Understanding what your business is worth doesn’t mean that you’re looking to sell.
An event could happen to a business owner and they may not be prepared for it.
What would you do with your business in an unexpected event?
Getting a valuation done on a company allows you to understand what the value is now. It’s a strategic business strategy.
You can also grow the value of your business by doing the things that you’re recommended to do based on the valuation.
The valuation can significantly go up if you’re doing the three or four things that valuation finds.
Typically, a business will sell based on a multiple of their EBITDA (which stands for earnings before interest, taxes, depreciation and amortization).
Depending upon the type of company, an average multiple might be anywhere from three to five times EBITDA – that’s what your company would sell for.

Inhibiting Valuation

To make sure you’re not lowering the valuation of your company, make sure that you have the proper insurances in place.
Have the protections in place for your contracts and make sure you have contracts in place with your customers and employees.
Make sure that you have a really strong management team in place, buyers want to be impressed by your management team.
Make sure that you’re looking at your financial reporting – do you have your finances in place?
Potential buyers may want to see that you’ve had an audit of your financials done and they want to see that they’re clean.
Understand your customer base and look at if your revenues are trending up or trending down.

Transitions in Your Career

Avenue M® Advisors, Inc., is a national, boutique financial valuation services company focusing on business valuations.
Melisa has a legal background, but decided to go into corporate and work for several technology companies.
She made several evolutions over her career, transitioning into doing valuations and then became a business owner.
She is also now the Managing Partner of The Founders Group, a business succession and transition planning firm.
She loves to help people and puts on business events on a monthly basis, the first Thursdays of every month.

Best Quotes:

“If it’s done properly, you’re going to have a list of the weaknesses in the company and you’re going to have a list of the strengths in the company, so that that business owner can go and focus on the weaknesses and turn those weaknesses into strengths. And by doing that, you’re building value. You’re increasing the value of your business.” (6:33)

“If you’re going to put a buy-sell agreement in place, make sure you get an evaluation done because you want an independent value. You need a starting point because we know how much financing or insurance you need to get to cover it.” (13:17)

“There is a lot of information in the valuation report that you should be able to use, if you understand it, to negotiate with a potential buyer. It gives you a lot of information that you need to make very persuasive arguments as to why you have the purchase price that you’re listing the business for.” (18:07)

“If you don’t have a management team in place and if a business owner is not able to take time off and do other things, that’s going to decrease the value.” (22:32)

“Are you looking at your profit loss statement? Are you looking at your balance sheet on a regular basis? If you’re looking to sell your business, do you have audited financials?” (23:08)

“It was really important to me to be able to not only do the evaluations, but then to be able to help these business owners be able to make the improvements to their business so that they could make their business more valuable.” (28:28)

“There’s so many opportunities because if you take a look at the demographics because of all the baby boomers and they all have businesses, there is going to be a lot of transitioning of businesses, whether it be to their kids, to partners, to their employees or whether they sell the business, they’re going to have to do something and they only have a few options.” (31:20)