Business Valuations
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Fair Market Valuations
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Independent 3rd party determination of going concern value
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Essential for business sales, acquisitions, exit & succession planning, wealth management, and dispute resolution
When buying or selling a business, a third party valuation of your business is important. A business valuation is a computation of the worth, or fair market value, of an existing business or going concern. That fair market value is basically the price at which a business would change hands between a willing buyer and willing seller, assuming they both have all the relevant facts about the business. Determining the true value of a business enterprise requires a careful analysis of two primary components that make up its value: tangible assets such as real estate, machinery, and furniture used by the business; and various intangible assets such as goodwill, customer lists, trade secrets, superior agreements, physical location, special processes, and name recognition.
There are many ways to estimate the value of an on-going business. Some will be more accurate than others. But, to value a small to mid-size business, based on recognized appraisal standards requires the use of three main approaches. These approaches include the Income Approach, Market Approach and the Asset Approach. Leonard consider all these approaches and the underlying methods to assist entrepreneurs in understanding their business’s value depending on their needs. Clients may need a business valuation if they are considering selling their business to establish a target selling price; if interested in purchasing an existing business for expansion they would need a business valuation to determine a reasonable purchase price. To develop exit-planning strategies, for succession planning or for wealth management a business valuation is necessary to estimate the value at the time of a transfer of ownership and it would assist in determining growth strategies to meet the entrepreneur’s goals.
Business Financial Analysis
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In depth review of current financial condition and past performance
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Analysis of financial operations and management's effectiveness
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Industry comparisons and trend analysis
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Tool for entrepreneurs to determine strategies to improve profits and sustainability
The financial statements of a business tells a story about what is happening in that business. The process of reviewing the financial data of a company starts with the evaluation of the accounting system, or how the financial data is collected. It includes a review of the current financial condition of the business, or snap-shot in time, of the assets, liabilities and equity of the business. This is referred to as a Balance Sheet and indicates how the funds of the business are being utilized. It also includes an analysis of the financial operations of the business in the form of revenues generated and the costs of operating the business over a period of time. This is more like a motion picture of the business over that period of time and is referred to as an Income Statement or a Profit or Loss statement. The analysis of this information includes computations of relationships between the various aspects of the business’s operations to help determine the effectiveness of management, utilization of assets, financial risks of the business and its sustainability.
Various computations include ratios to determine profitability, liquidity (the ability to pay for current operations) and solvency (the ability meet long-term financial obligations). Other analysis involves comparing the business with others in the same industry, called benchmarking. Another analysis determines the cash flow and how well cash is managed in the business. And, yet another, determines at what number of units or sales, it takes for the business to break-even. All of this helps the entrepreneur manage the business and determine strategies that can improve profits and sustainability.
Succession & Exit Planning
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Reach both personal and professional goals
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Create transition plans to realize best value for business transfer
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Protect years of investment
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Personalized approach to help identify, protect, and enhance business operations
Effective exit planning involves discussions regarding a number of different aspects of an entrepreneur’s life – both personal and professional. It is necessary for the business owner to think about their future – to decide how they might like to leave their business someday. A good plan will help them to design their business in such a way to ensure that they can achieve both their personal and professional goals.
By working closely with the business owner and their own advisors, Leonard can help develop a plan for the eventual transition from the business. With help from a team of advisors, the business owner can exit their business on their terms and for the best value. Leonard can assist with what appears to be an overwhelming task and break it into manageable steps to develop a transition plan to help them reach, not only their business and financial goals, but also their personal goals as well. This process is a very personalized approach to helping the business owner identify, protect, and enhance their business, while managing the transition process to realize the best value for their business.
For business owners that are planning to sell/transfer their business, we recomend beginning the planning process to develop a transition plan at least two years in advance of that eventual time. Transition planning requires an owner’s investment of their time, their attention and potentially some capital. When done in a thoughtful and deliberate manner, a transition plan can be very beneficial. A transition plan can help the business owner protect their years of investment and position that business to receive its maximum value which they can feel comfortable with.
Transition Consulting & Planning
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Assistance in maximizing value in transitions
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Buying or selling your business
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Timing and smooth transition to new owners
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Need for valuation prior to a transition decision
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Involve all your business advisors on the team
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Improve business value for continued success
You have worked hard and now it is time to sell or transfer ownership of your business. Leonard can provide the needed assistance to ensure you receive the maximum value, a smooth transition for new owners, and continued success for your business. Transitioning a business can be overwhelming and fearful at times. But, when it comes time to transition from your business to your next life adventure, perhaps you could use a little assistance with managing the unknown, whether you are passing the business to your heirs or selling it to a third party. For many business owners, the value of their business can represent their largest personal financial asset, yet they have no idea what the business might be worth. Let Leonard help you know its value and how you can increase the value of your business by assisting you with the necessary financial analysis and some objective recommendations to improve its operations. Leonard can help your business run more smoothly and profitably by providing cost effect advice and advisory services to your business before it is time to transition.
Transitioning ownership of a business involves all kinds of decisions. Are you going to sell your business to a third party? Will it be transferred to family members or key employees of the business? How will the transaction be structured? Will you get the total value you should receive? Or, are you the buyer and need assistance in valuing the business to determine the correct purchase price and complete the due diligence to make sure you are getting what you pay for?
When buying or selling a business, an accurate valuation enables you to better understand the value of the business and confirm in advance what makes the company valuable. When selling your business you need to know if it will enable you to reach your financial goals. If not, we could help you determine steps necessary to increase its value for a future sale by identifying key value drivers that increase the company’s value, as well as identifying the risk factors that actually reduce its potential value. Helping to eliminate or reduce those risks will make the business more valuable in the future. This type of planning could significantly increase, not only its value, but its marketability as well, when it is time to sell.
If you are considering a partner or shareholder ownership change or buyout, which are common in closely held companies, you might like some assistance. Anything from retirement, death, divorce or disputes among co-owners, usually would require an accurate business valuation. Buy/Sell agreements exist to assist in such circumstances to help owners come to a reasonable conclusion of value. Working together with an experienced valuation professional can help reach an amicable resolutions in a cost effective way.
Family Business Consulting
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Takes into account family values & relationships
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Conflict resolution within the business
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Analysis of the separation of family and business functions
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Personnel and management retention of family members
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Succession identification
Planning for a family’s future includes thinking about their financial needs and understanding how they will incorporate their personal values into the decisions they make regarding money. For many business owners and their families, discussions around money – how much they need and how much to spend or save can be very stressful. The business owner’s values concerning wealth and financial management is often a source of conflict in both business and family relationships.
After years of dealing with the dynamics of families and business, Leonard has learned that the success of many family businesses is influenced significantly by sound parenting. As a parent, our major task is to raise up responsible adults who can function independently, be responsible and care about others. On the business side, the business’s objective is to generate profit to provide for the well-being of the owners and its investors. If the business doesn’t generate a profit, then it will, most likely, not be in existence long. Personnel, and most importantly, management’s retention and acceptance in any business is based on competency, the ability to produce and perform. If they cannot produce and perform, then they really do not belong in the family business.
The dynamics of having both family and business interacting, many times, creates conflicting messages, causing a family to struggle with various activities and sometimes try using the business for what they should be doing at the family level. This is probably one of the biggest mistakes a family business will make. Maintaining a distinction between family activities and business functions is one of the most important pieces in building a successful smooth-running family business. What is good for the business and the family members combined is the ultimate goal of the family business success.
This is an area that requires emotional intelligence and can be an opportunity for the family to discuss how their family values will impact the operations of the family business – how it is managed and maybe more importantly, who will manage the operations of the business.
Tax Preparation and Accounting
Tax Preparation
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Personal and Business tax preparation
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Current on changing tax laws, deductions, and rules for accuracy
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Committed to filing returns on time
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Minimize tax liability and maximize allowable deductions
Leonard has been providing tax preparation and accounting services to satisfied clients for over 40 years. He understands most people are busy and offers convenient and flexible hours by appointment or can assist via online resources, email, text, or mail. Leonard helps minimize your tax liability, personal and/or business by completing tax returns thoroughly and accurately maximizing your allowable deductions.
You can expect your taxes to be prepared professionally by someone that regularly stays up-to-date on the changing tax laws, deductions, and rules that impact your taxes. Leonard uses the latest tax software and tax research to ensure your returns are compliant with the latest changes to the tax code. So, you can depend on a complete and accurate processing of your taxes.
Leonard is committed to filing your taxes on time, and strives to file personal returns on time when he has tax documents by April 1st. If information is not ready or available by that date he is happy to file an extension giving the taxpayer more time to get their papers in order and alleviate undo stress. His goal is to make the tax preparation experience as painless as possible with accuracy and due diligence.
He offers tax services for small to medium sized businesses and the preparation of business tax returns for limited liability companies, partnerships, for ‘C’ and ‘S’ corporations. When your business demands the best, choose a professional CPA firm that understands the needs of a business to prepare your tax returns.
Accounting
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Keep efficiency high and costs low
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New and existing businesses
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Understandable explanations and business coaching to create a successful future for the business
Accounting consulting services are available to both new and existing business operations. Banks, lenders and IRS agents prefer accounting records and financial statements that have been prepared, rather than a shoe box of receipts. Leonard examines financial records every day and can usually spot accidental inconsistencies and errors.
Leonard partners with local bookkeepers to keep efficiency high and costs low. With online banking and credit card access, there might still be items that need to be provided to help develop an accurate accounting of the business operations. To provide a personal touch in this virtual world, face-to-face interaction is Leonard’s policy even though it might be considered old school.
Leonard spends the time to understand your financial world and can offer healthy and sound business consultations to help determine if you could be more profitable or could utilize your assets more effectively. Industry comparisons can be done as well as statistical and trend analysis which can be provided to identify action items and areas needing improvement. Previous months or years' data can be utilized to determine how it compares to others within the same industry. Anyone can crunch numbers, but to provide you value, Leonard crunches the numbers, tells you what they mean, and offers business coaching to create a successful future.