Business Valuation

Even More Business Valuation FAQs

To continue the series of Business Valuation FAQs, here are even more questions and answers. We hope you enjoyed the picture of the iconic HP 12c business calculator!  Many people still use it, all these years later. Back to the FAQs. These are questions we periodically hear in our valuation practice. Can a business have more than one value? The short answer to this question is an unequivocal “Yes”. The longer answer is that the value of a company can be different depending on the purpose of the valuation and in cases of acquisitions, who the buyer is and their…

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Business Valuation

More Business Valuation FAQs

Earlier, I posted a list of business valuation Frequently Asked Questions.   That post was well received, so I’m posting another bunch of FAQs. There is some overlap between this group of questions and what I’ve posted in the past. But it doesn’t hurt to cover the same ground twice. How do business valuators determine value? A previous post entitled “How Do Buyers Value a Business (Danger: Wonkish)”  sort of addresses this question.  It was written from the perspective of a buyer in a Mergers & Acquisition situation.  But M&A is only one of the reasons why you may be valuing…

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Buying & Selling a Company

Some Questions About Selling a Business

We often work with the owners of privately held companies. Here are some of the questions we get when our clients are thinking of selling their business. And some short answers to their questions. What is the value of my business? The best answer to this question is the price a buyer offers that you are ready to accept. A business valuation can result in different values depending on the purpose of the valuation. But for the sale of a business, it boils down to what someone is willing to pay and what you are willing to accept. Every buyer…

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Alternative Investments, Decision Making

What good are derivatives and futures? To keep the tulips in line!

One of the greatest bubbles of all time was the Dutch Tulip mania that collapsed in 1637. At one point before the collapse, a couple of Tulip bulbs were worth enough to buy a house. I can only imagine the sweet schadenfreude of the average Dutch citizen watching the demise of their fellow countryman when the bubble burst. This was probably the first recorded speculative bubble. So what caused that bubble to occur? For this discussion, let’s replace tulips with Bitcoin. No this is not an arbitrary bait-and-switch metaphor. The two possess the same dynamic and the example is more…

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Culture and Ethics, Decision Making

Competency Trap or Kill-The-Goose-That-Laid-The-Golden-Egg?

How many successful companies miss out on ultra gigantic opportunities in their industry? ATT had developed some early technology for mobile communications in the 1940s. (Yes, the 1940s). It was difficult to bring to market because of technical hurdles. Rather than continue to research and innovate to overcome these difficulties, ATT gave up and other companies took the market later. Motorola developed some of the first cell phones but also was slow to innovate.  They played catch up, succeded with some innovation with the  RAZR yet completely lost the market on the death of an influential marketing leader. Xerox was…

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Culture and Ethics, Decision Making

Four Pillars to Successful Change Management

Almost all organizations have employees, sub contractors or other types of associates.  These are your ‘Colleagues” though their exact role and relationship to the organization will vary. We need to manage and sometimes to engineer organizational change. That’s usually a difficult task and the track record of these transformations is usually not a positive one. Psychologists – academic researchers and others – have developed some ideas on what seems to be some of the more effective ideas on what will work. This model consists of what I call the Four Pillars of Transformation – four things that can be done…

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Decision Making

My Favorite Cognitive Biases #2

My last post listed some great cognitive biases. The human mind is easily fooled by both ourselves and others! I could list more, of course.  There is so much published on this topic that it could fill many posts. That being said, here is a bunch more. Gambling System Bias – gambling is a real problem that causes harm. I’ve seen the damage gambling can do in my own family growing up. There’s always a rationalization. And they stick to their ‘system’ well beyond the point where it obviously doesn’t work. I heard an old gambler one time say as…

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