Increasing Business Value

Appraisals with Integrity, Professionalism and
 the Highest Standard of Excellence in the Industry. 

Many business owners do not know the value of their own businesses. Unfortunately, some business owners arrive at the value of their business by using tax returns, depreciation schedules or financial statements prepared for tax purposes as the only financial presentation of their business. You should know that book value is not the same as true “fair market value”.

Lenders, Business owners, Attorneys & CPA’s need a non-biased third party to supply a certified appraisal that is government compliant with the Universal Standard of Professional Appraisal Practice and Advisory Opinions, commonly referred to as USPAP.

Certified Appraisals performed by Davis Business Appraisers are USPAP compliant. The values can be substantiated and are defensible and will withstand the scrutiny of the IRS, courts, lenders and others.

Our close association with , ISBA, NEBB and its’ Certified Valuators & Appraisers lets us reach out to you anywhere in the U.S. and many parts of the world. We can handle very small or large appraisals in a timely fashion at a reasonable price

Davis Business Appraisers Benefits to You

Certified Appraisers
We endorse and comply with the regulations of the Uniform Standards of Professional Appraisers (USPAP). Davis Business Appraisers meets or exceed the standards and qualifications of a Business Valuation or Certified Machinery & Equipment Appraiser (CMEA). 

Confidence in Your Appraisal
Most business owners do not know that an error in judgment in appraising machinery and equipment can be costly. That's why as a business owner, you should have confidence that the values are true and are backed by evidence to support the fair market value. 

All Appraisal Reports Are Not Created Equal
Davis Business Appraisers will deliver a comprehensive and detailed Certified Appraisal Report consistent with the ethics and guidelines mandated by the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP, promulgated by Congress and the Appraisal Foundation, is the leading authoritative source for appraisals. 

Highest Expectations
That's why you can expect to receive an accurate, irrefutable, defensible, and descriptive report that includes photographs, model and serial numbers, and other descriptive information that will withstand scrutiny. Our assignment of value is based on extensive research, personal inspection, and contact with manufacturers and suppliers to determine what your items are really worth. 


Davis Business Appraisers
A Division of Sajomach Business Services, Inc.
Business Valuations - Certified Machinery/Equipment Appraisals - Owner & Acquisition Consulting

We are the Business Valuation Experts Who Help Owners 
Increase their Business Value
Contact Us Today    Phone: 757-410-3851  Fax: 757-512-5937      Email: DBAvalue@gmail.com 

Increasing Business Value

Keeping the Family Business Alive

 by Roland Davis on 02/07/15

More than 70% of family businesses will not survive the transition to a second generation. Nearly 90% fail to make it to a third. Those are sobering statistics to anyone who entertains the thought of passing their business on after they step down. Any number of reasons can cause these businesses to fail—many of which are simply beyond control. But the unfortunate fact is most don't fail due to market downturns or changes in consumer behavior, they fail due to a lack of planning.

Anyone planning  to pass a business on to the next generation, needs a continuation plan—a strategy to ensure that the business and the people whose incomes and lives depend on it will succeed when the current owner is no longer at the helm.

Business Valuation Is a Critical Component of the Continuation Plan

Business valuation, the process of determining the worth, or value, of a business is the necessary first step of a continuation plan. The primary reason to undertake a valuation is to estimate what an informed buyer would pay to an informed seller to purchase the business. Even if the business will never come up for sale, there are other important reasons to know the business' worth. For instance, if the owner:

  • Plans to gift or sell the business to children, grandchildren or another relative at retirement
  • Should pass – a business valuation is required for estate tax purposes
  • Should divorce – valuation can become an expensive legal battle
  • Buys or sells shares to employees
  • Provides key employee insurance coverage
  • Offers performance based compensation plans
  • Provides a basis for compensating key non-family management

Don't Underestimate the Value of a Business, or the Need for Expert Guidance

For owners who plan to transfer a business to heirs, it's only natural to try and minimize the transfer cost in order to avoid taxes. In fact, a 2010 survey showed that the typical business owner misjudges the value of their company by 59%.* While it may be tempting to underestimate the fair market value of the business, the Internal Revenue Service (IRS) will closely scrutinize the valuation to ensure its propriety.

The IRS has upgraded their business valuation guidelines and added 300 in-house appraisers to crack down on abusive tax reporting. IRS has three accepted valuation approaches:

  • Asset-based: Determines value by adding the sum of the parts of the business (net asset value)
  • Market: Compares the company to other companies in the same industry, of the same size, and/or within the same region
  • Income: Calculates the net present value of the benefit stream generated by the business (discounted cash flow)

A financial professional can help determine which approach is appropriate. While IRS guidelines may be black and white, a financial statement may not address the complete story of a company's value. For instance, many family businesses:

  • Have family member/employees who do multiple jobs but draw only one paycheck
  • Charge salaries to operating expenses that are much higher than would be paid for that service
  • Would suffer a loss of revenue with the passing of a particular family member

 Most businesses already rely on trusted financial advisors. In fact, many CPAs could perform an analysis to inform a valuation. However, an expert with the proper credentials is better suited to compile a valuation that can withstand an IRS audit.

Business Valuation is Only the First Step

Knowing the value of a business is a critical first step in the financial planning process. However, a formal plan needs to address succession, retirement, and estate planning. A common way to address these issues and ensure a smooth business transition is with a "buy/sell agreement." A buy/sell agreement is a contract between the owners of a business that enables the remaining owners to purchase the business interest of any co-owner who dies, becomes disabled, or retires.

 The buy/sell agreement spells out the specifics of transferring ownership and is critical in a family business with multiple owners. However, the buy/sell agreement must have financial funding in order to be of value to the stakeholders. A common way to fund the agreement is through the purchase of a life insurance policy. Life insurance can protect against financial loss due to death and can be obtained with less expense than other ways of funding a buy/sell agreement.    

Consult a financial professional experienced in small business to fully understand the available options. The right professional can conduct the business valuation, establish the buy/sell agreement, and develop a plan to fully address the goals of the family business to ensure it moves from one generation to the next.

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Know Your Cash Bottom Line

 by Roland Davis on 12/01/14

No excuse. 

Not knowing your cash balances every week or at worst each month is a mortal sin. While most small business owners look at their checking account balance, many have never constructed a cash flow statement for their business. 

A cash flow statement is not a budget with comparison to last year. It is complimentary to a Profit & Loss Statement and Balance Sheet.

The cash flow statement should be a one page report that gives you the current status of your cash flow in a simple,easy to read format

Make it your new years resolution. Know your cash in 2015. Comment or email me at DBAValue@gmail.com

 

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