The United States Small Business Administration (SBA) has extended disaster relief loans to include businesses that have been negatively impacted by COVID-19. These low-cost loans are intended to provide working capital relief to companies and small non-profit organizations to alleviate economic injury caused by the pandemic. Note that Economic Injury Disaster Loan assistance is available only to small businesses when SBA determines they are unable to obtain credit elsewhere.Read More
Henry Ford famously said, “Whether you think you can or can’t, you’re right.” When it comes to buying your first business, the ability to effectively run a business is a different skill set than what is required to complete an acquisition. As a result, many successful companies and/or executives underestimate the complexities involved in closing a transaction.
By far the largest hurdle that first-time business buyers need to understand is that sellers don’t have to be rational. A buyer can develop all sorts of financial models projecting certain rates of return on various capital structures, but a seller rarely cares. Their internal rate of return is not calculated on a spreadsheet, but rather, by what they’ve been able to provide for their family and what they hope to enjoy in retirement. A successful transaction, therefore, must meet the personal goals of the seller while protecting the financial goals of the buyer.Read More
Acronyms are ubiquitous in the transaction world. Sometimes I forget that the accounting acronyms that are spoken aren't always known to the companies that are actually participating in the deals. I think we've now become accustomed to hearing EBITDA (earnings before interest, taxes, depreciation, and amortization), but what about TTM? That's trailing twelve months, and it's used when we're looking at 12-month periods that don't coincide with the company's FY (fiscal year).Read More
A common question that I’m asked is, “Where are the current multiples for my industry?” The answer: it depends! Think about business valuation multiples as being an average or median of a data set. It’s likely that the company in question is not an average company, but rather is probably performing above or below the average of its peer groupRead More
Valuing a private company requires more than simply applying technical models. It also requires complete understanding of business operations, economic and industrial conditions, tax laws, and knowledge of the current capital markets. You can trust the valuation consultants at Meaden & Moore to be well-versed in all these areas and more. The need for valuing a private company may vary, but the approach is largely the same.Read More
Over the past 20 years, we have witnessed an almost complete transition in the lower middle-market from prime-based loans to those based on LIBOR (London Interbank Offered Rate). In fact, it’s estimated that there are currently over $350 trillion of loans and other financial products based on LIBOR.
There are many reasons why the shift occurred, notably the fact that LIBOR is market-based while prime is an administrative rate.Read More
I recently came across a 2015 study by the University of Innsbruck that concluded that people who drink black coffee, tonic water or enjoy radishes are more likely to be psychopaths. Actually, it states that people who enjoy those items are more likely to exhibit signs of “Machiavellianism, psychopathy, narcissism, and everyday sadism”. Not sure how “everyday sadism” differs from just plain old sadism, but they’re Austrian and must know something I don’t. Anyway, I happen to enjoy all three of those things, although I must admit the tonic water needs gin to make it palatable.
The reason, according to the study, is that psychopaths enjoy taking risks. The bitter flavors found in nature (or black coffee) are often from plants that are poisonous.
Thanks for dropping the knowledge, Lloyd. But where are you going?
If psychopaths enjoy taking risks, would that suggest that entrepreneurs are psychopaths? Of course not. Psychopaths generally have a lack of empathy and feeling for others, selfishness, lack of guilt, and a superficial charm that manifests exclusively to manipulate others. OK, that sounds like some entrepreneurs I’ve met, but risk taking on its own can be explained by other, less menacing-sounding traits.Read More
Much of the excitement in recent years has centered on the great transfer of wealth that is expected to occur as Baby Boomers retire. There is no denying the demographics: the Pew Research Center reports that 10,000 Boomers will turn 65 every day for the next 19 years. Gads…where are we going to put them all?Read More