Business Valuation, Buying & Selling a Company, Decision Making

The Hows and Whys of Recasting Financial Statements

Gregory Pearl

Businesses have certainly seen a variety of conditions in the last conditions, both up and down. Businesses track their performance using the standard financial statements such as balance sheets, profit and loss (income) statements, cash flow analysis and tax returns. Cash flow analysis is particularly important, understanding how the money is used in the business over time. These performance tracking statements and documentation should reflect the ups and downs of a business over time. Recasting or restating these financial statements are important in determining the value of a business prior to sale.  Recasting means a deep analysis to make sure…

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Alternative Investments, Decision Making

Where Have All The Startups Gone?

Gregory Pearl

Small businesses and startups are traditionally the backbone and driver of the American economy. They are the primary creator of new jobs.  They are the primary source of innovation.  They are important. But the number of startups being created in the USA seems to be declining.  In 1985, 13% of all companies in the USA were less than two years old.  In 2014, they were only about 8%.  The number of people working in companies less than two years old declined from 9% of the workforce to below 5%. This is happening in every industry, not just technology.  It is…

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Alternative Investments

The Problem With Investing In Super Deep High Tech

Gregory Pearl

Technology continues to move forward and what was once leading edge often becomes ordinary. For instance, technology advancements such as high-resolution portable screens and even websites were once leading edge and risky.  Many made boatloads of money from investing in these technologies at the earliest stage, most of these investors did not. That is why it is sometimes called ‘the bleeding edge” of investing. Now, so-called “deep tech” involves reusable space rockets, cryptocurrency, next-gen solar cells, many biotech applications, artificial intelligence, and so on.  Some of the efforts in these areas could be phenomenally successful, most will not.  But the…

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Business Valuation, Buying & Selling a Company, Exit Planning

Know These Six Biggie Mistakes When Selling Your Business

Gregory Pearl

I write a lot about the issues that can arise when selling a business.  You may get tired of reading about it … but the once in a lifetime sale of a privately held business is probably the most important transaction in a business owner’s life. So here is another post on the subject. Business owners often underestimate the effort needed for a good outcome in a transaction.  They also over estimate the value and salability of their companies. Consider these items: Overestimating the value of the company.  The listing price should be based on the fair market value of…

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Buying & Selling a Company, Exit Planning

Myths About Selling A Business

Gregory Pearl

The business owner will only sell their business once.  It is the most important transaction of their lives. The process is complex with legal, tax, valuation and personal planning issues all co-mingled. If you are a business owner looking to sell a business soon, here are some of the ‘myths’ we often hear that, if believed, can result in a less than optimum outcome. First Myth: I know what my business is worth, better than anyone else. Some owners want to be reimbursed for “sweat equity”.  Others think their business is worth what they need in retirement.  Yet others use…

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Alternative Investments, Decision Making

Why Do Some Cities Have More Startups?

Gregory Pearl

The fortunes of Silicon Valley and the Tech Industry goes up and down. And yes, things are always changing. But this much could be said with good confidence. The tech scene in my life-time has probably been one of the greatest wealth generators in the history of mankind. This includes not just California.  Also the other innovation hubs including Austin, Boston, New York, Seattle, and so on. Sadly, my long-time home of Chicago does not make that list.   I’ve done business in all those places and believe me, the difference between Illinois and the rest is palatable.  Just visit these…

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Alternative Investments, Culture and Ethics, Decision Making

Venture Capital and Avoiding Human Bias

Gregory Pearl

Here are some thoughts on Venture Capital or early-stage investing. As readers of my blogs know, Alteris LLC has had professional Venture Capital firms as clients. We have acted as business valuators, but also in the role of “operating partners” to some of these firms. This situation has allowed us to observe best-practices in these early-stage investment firms. Venture Capital and other types of investing is a competitive and often brutal activity. In a typical VC fund, a small number of investments typically account for a large portion of returns. The simple fact is that the majority of investments do…

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