Decision Making

My Favorite Cognitive Biases #1

Buying and Selling Companies, Investing, and even just general life involve decision-making. I’ve seen people in positions of authority really make some bad mistakes in their decisions. Decisions that were obviously bad to those around them before action was taken by the power figure. What causes this? Are they dumb? Well, in some cases yes. Just because a person has power doesn’t make them smart or wise. But sometimes otherwise smart people fool themselves. If you are really interested in this subject I would refer you to the book Thinking Fast and Slow by Daniel Kahneman. If you are really…

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Alternative Investments, Buying & Selling a Company

What Is Mezzanine Capital?

I get asked this question occasionally. The question is usually asked by non-financial directors/officers of client companies. It just came up again so here is a description. Usually mezzanine capital is defined as unsecured, higher-yielding loans that are subordinate to bank loans and other secured loans but rank above equity in the event of liquidation. Here is a more in depth explanation. Mezzanine is junior debt that is between senior debt and equity on the balance sheet. Therefore it is called mezzanine, a Latin word that means “middle.” But there is more. Mezzanine capital now means more than just subordinated…

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Culture and Ethics, Decision Making

Balance the Positive and the Negative

Early on in my career, I worked with an astonishingly effective salesman.  He did exactly what you’d expect such an effective sales professional to do, be enthusiastic, deal well with rejection (when it happened), craft a good succinct story, understand his customer’s needs. One thing he also did is that he looked at the negative. He analyzed the situation and his customer and put it this way “Eliminate every reason why the customer can say No and then he has no reason not to say Yes.” He looked for the obstacles and problems in the situation and determined a solution…

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Business Valuation

The Four Steps of Valuation

Alteris LLC offers a unique approach to business valuation – the Four Steps of Valuation. Each step is increasingly more detailed and comprehensive. You can pick the level of valuation that fits your needs. Step One – The Express Valuation The Express Valuation uses very basic industry formula, market and other sector metrics and is ideal for preliminary business planning and general information. If you have never valued your company or want a very general “ball park” estimate, the Express Valuation is for you.  The Express Valuation is only for use in conjunction with other consulting services and should not…

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Business Valuation

Business Valuation FAQs

What is a Business Valuation?  A Focus on Value.  A business valuation determines the estimated market value of a business entity or financial asset in total or in part. A valuation estimates the complex economic benefits from combining a group of physical assets with the intangible assets of the business, most likely as a going concern. The Fair Market Value estimates the price that hypothetical informed buyers and sellers would negotiate at arms length for an entire business or a partial interest. Business Valuation: Art or Science? A business valuation combines quantitative financial techniques with qualitative analysis of the business, the…

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Business Valuation

Why Do You Need a Business Valuation?

A business is usually the most important asset that a business owner has.  When you need to know the value of your business assets utilizing the services of a valuation expert is needed. Here are just some of the situations where a valuation are needed: • Estate planning • IRS Liability due to a taxable event such as estates (death of equity holder), gifting and so on • Retirement funding estimates • Buy-sell agreements and insurance • Marital, Partnership & Corporate Dissolutions • Annual valuation of stock options • Exit planning strategy • Value maximizing strategy – increase what a…

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Business Valuation

How is a Business Valuation Conducted?

The business valuation process can be broken down into four parts. 1) The engagement process 2) Research and data gathering 3) Analysis and development of the business value 4) Reporting engagement results There are several items that need to be considered at the start.   What legal interest is to be valued – (e.g., 100% of the company’s common stock  but partial interests can be valued too) Valuation date – the exact date the company’s value is to be calculated The valuation purpose (e.g., tax, business sale, litigation support, business planning and so on) Define the standard of value, which…

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