Author: Gregory Pearl

Alternative Investments, Business Valuation, Buying & Selling a Company

Seven Factors That Will Increase The Value of Your Business

Gregory Pearl

What do Buyers specifically look for when buying a business? Or stated another way, what factors affect business value? What increases or decreases business value? There are many things that affect business value. Some may be obvious others not so much. But all will require that you, the business owner, pay attention to them. Here are seven factors to consider. 1) Poor Quality Financials. Having poorly prepared financial statements means the Buyer may not know what he/she is buying. And there may be hidden problems in the company. It is best to have independently audited financial statements that do not…

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Alternative Investments, Business Valuation, Buying & Selling a Company

How Do Buyers Value a Business? (Danger: Wonkish)

Gregory Pearl

The overriding theme of business valuation for Mergers & Acquisitions is that anything that increases Cash Flow increases the value of the business.  Cash Flow (not profits) is the most important factor. The methods listed are for established businesses with ongoing revenues.  Valuing startups is another thing entirely. The specific technique used to value a business can vary, and the use of any depends on what the buyer prefers.  But here are some common ones. Smaller businesses bought by an owner/operator tend to be valued based on: a multiple of Seller’s Discretionary Cash Flow (Owner’s Salary & Benefits + EBITDA…

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Alternative Investments, Exit Planning

Yet Another Reason Why Indexing is Best for Most DIY Investors

Gregory Pearl

Patrick Luo is a doctoral student at Harvard. He published a new study that supports the idea of just how hard it is for the average investor to achieve returns better than the market when trading individual stocks. The paper is called: “Talking Your Book: Evidence from Stock Pitches at Investment Conferences”. His research shows that well-known hedge fund managers – those private investment firms that often control billions in investment funds –  often publicly pitch the stocks they currently own as great investments. Then, after the stocks rise quickly due to the publicity, the hedge funds will sell them…

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Decision Making, Exit Planning

How To Calculate If Your Retirement is Fully Funded

Gregory Pearl

What does “fully funded” mean? It means you have enough money to provide the retirement you want to have for the length of time you need it to last. I talked about this topic in an earlier post though in a more general way.  This article points to some of the specific techniques you can use to know the answer to the above question. It doesn’t give the mathematical detail on how to do it, but simply the direction. I said mathematical because at its core this is a calculation. As with all calculations forecasting the future, the results are…

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Decision Making, Exit Planning

How Much Money Do You Need to Retire?

Gregory Pearl

A very critical part of an Exit Plan is determining how much money you need to retire. Or another way to ask the question is how long the money you have now will last given your current spending and goals. Money may not buy happiness but it can buy freedom and security. And those two things contribute significantly to being happy. Money also reduces being sad, according to academic research. Perhaps because having it gives a sense of control over your life and who doesn’t want that? Money is a difficult subject for most people to talk about. It is…

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Buying & Selling a Company, Exit Planning

How to Get a Company Ready for Sale

Gregory Pearl

Your company is your most valuable asset. You have spent years creating, building, and nurturing it.  It is your life’s work.  And now may be the time when you are thinking about selling it. There are probably many reasons for this, but the time is right.  There is one thing for sure. Selling a company can be a long and complex process. Here is some of what you will need to do to get your company ready to sell.   Each business is unique and will require specialized actions particular to them. So what we are saying here is generally what…

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Exit Planning

Succession Planning is Not Exit Planning

Gregory Pearl

We talk a lot about exit planning for business owners on this site. Exit planning terminology can be a little confusing and have different meanings depending on who is being asked. Sometimes it goes beyond just the terminology to how the terms are related, meaning embedded in each other. Many business owners believe exit planning is the same thing as succession planning. But these are two different concepts, related but different. To make clear what each is and is not, here are some descriptions. Succession Planning identifies owner and management successors for a business. It also provides the identified successors…

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