Avoiding Costly Shareholder Disputes


Avoiding Costly Shareholder Disputes

Business ownership can be complicated, particularly when there are multiple shareholders. The odds of disagreement and conflict among shareholders over various issues can be very high. When shareholder relationships break down there must be a mechanism in place for dealing with the dispute or for enabling one or more of the shareholders to exit the business in a pre-determined manner. A shareholder buyout can quickly turn into a costly dispute if the value of the business has never been discussed and agreed to among the shareholders. Different shareholders likely have different expectations regarding the value of the business. Having an […]

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Business Valuation – Critical to Enhance Value and Manage Wealth

As a business owner, the value of your business likely represents a significant portion of your wealth. According to a publication by Mercer Capital: “About 75% of all private equity is owned by households for whom it constitutes at least half of their total net worth. Households with entrepreneurial equity invest on average more than 70% of their private holdings in a single private company in which they have an active management interest.” [1] Enhancing and managing this privately held business wealth is critical to business owners and this process begins with an independent business valuation. Value Enhancement The process […]

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Business Valuation – Critical for Managing Value Expectations

Are you trying to build a business to one day sell for top dollar? If so, it is critical for you to manage your value expectations and to be aware of how your business will be perceived and valued by potential purchasers. Many business owners have unreasonable expectations regarding the value of their business. According to RBC Business Succession Planning: Your Essential Roadmap, “It is important to get a professional business valuation, since owners may grossly overestimate or underestimate the value of their business.” Some business owners overestimate the value of their business and others actually underestimate the value of […]

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5 Ways to Position Your Company to a Strategic Purchaser

Facebook’s recent acquisition of WhatsApp for $19 billion represented the largest-ever acquisition of an Internet messaging service company in history. WhatsApp allows users to avoid text-messaging charges by moving texts across the Internet instead of the mobile phone carrier networks. This can save people who travel, or live in emerging markets, hundreds of dollars a year. As a result, WhatsApp is adding about one million new users per day. At the time of the acquisition in February 2014, WhatsApp had some 450 million users and, after the first year, charges users a subscription of $1 per year. Even if all […]

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10 Reasons to Invest in a Business Valuation

Many business owners do not know the current value of their business, which can represent a significant portion of their overall wealth. Worse yet, many business owners will grossly overestimate or underestimate the value of their business. A Chartered Business Valuator (CBV) or Accredited Senior Appraiser (ASA) can provide you with this extremely valuable information. Some business owners are reluctant to undertake this exercise because of the cost. They do not appreciate that the benefits of obtaining an independent valuation can far outweigh the cost. Obtaining an independent, professional business valuation for planning purposes does not have to be an […]

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Selling Your Business in the Coming Decade? It Pays to be Prepared

Proper preparation will greatly increase your chances of maximizing the net sale proceeds when you sell. Although preparation takes time, effort and attention, the benefits of planning far outweigh the costs. “Built to Sell” author, John Warrillow, discusses two such benefits in his recent blog entries (www.builttosell.com/blog/). A takeaway from reading John’s recent articles is that proper preparation will greatly improve your chances of: i) selling for a significant premium; and ii) avoiding buyer trickery. Let’s consider at each of these in turn. Selling for a Significant Premium: According to Mr. Warrillow’s recent research, companies that scored over 80 on […]

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9 Tips for a More Valuable Business This Time Next Year

The beginning of a new year is a time of rebirth and resolutions. It is a time to reflect on last year’s achievements and to set goals for the coming year. Some people set personal goals like losing weight or quitting a nasty habit, and most business owners set business goals that focus on hitting certain revenue or profit targets. If your goal is to own a more valuable business in 2014, you should select one or more of the following New Year’s resolutions: 1.Take a two-week vacation without checking in with the office. When you return, you’ll see how […]

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How to Double the Value of Your Business in Two Years

As we approach the beginning of a new year I reflect upon our firm’s achievements and challenges over the past year. Celebrating accomplishments and monitoring progress towards goals are vital to your continued focus, commitment and motivation. How did your business do this year compared to your original goals? Are you on track to exit your business at a time of your choosing? Has your business increased in value over the past year? Would you like to double the value of your business within a two year period? It may be challenging, but it can be done. Smaller start-up companies […]

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The Key to Timing the Sale of Your Business

When is the right time to sell your business? This can be a difficult question to answer. In Deciding to Sell Your Business by Ned Minor, Mr. Minor suggests that you should sell your business “at the point when you achieve your definition of financial independence.” I encourage business owners to consider timing from the perspective of: i) the business owner; ii) the business; and iii) the market. In a perfect world, each of these will be in alignment when timing the sale of your business. Let’s consider each in turn. 1. The business owner – when will you be […]

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The Perfect Storm for Enhancing Value

Growth is a major value driver for many businesses. A well documented growth story with a positive outlook for continued future growth (i.e. a sound growth plan) is very appealing to a potential purchaser. Having a competitive advantage in your industry is another key value driver because providing something unique or proprietary is extremely attractive to a potential buyer. Together these two value drivers create the perfect storm for enhancing value. Researchers at the Sellability Score have recently studied the results from over 5,000 business owners who completed the Sellability Score questionnaire. For those companies that had received an offer […]

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