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Monthly Archives: May 2019

We have distilled decades of experience at the intersection of law, business and finance into a suite of articles to help our clients make sense of business valuation, forensic accounting, and litigation support. Please visit our site regularly for our latest content.

  Our firm was recently retained to determine the fair value of a minority interest in a business for a shareholder dispute. Despite it being a sizable business, the owners never got around to memorialize the termination terms within its shareholder’s agreement.  Hence, one of the reasons for the current litigation is to address its value. This business had grown organically over the years and by acquiring multiple competitors.  It is now at a size that there are enough comparable sales transactions to consider under the market approach. In reviewing these transactions, we noted components to the deals that needed to be considered to address its cash equivalent value. When reviewing the file, I thought of two adages learned in business school relating to the time value of money. The first, “a dollar today is worth more than a dollar tomorrow” and second, “a bird in the hand is worth two in the bush”. How does this concept relate to business valuation? When the value of a business utilizes the sales of comparable companies under the guideline merger and acquisition (M&A) method, it’s important to understand the cash-equivalent value of comparable transactions. Creative deal terms can make a deal more (or less) valuable than it may appear.  Some of these terms may include installment payments, earnout provisions, and contractual agreements such as employment/consulting contracts and/or covenants not to compete. The following discusses a few of these issues that may affect the selling prices found within these transactions. Installment Contracts In […]


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What To Consider When Valuing Franchises

Posted in Business Valuation, on May 2019, By: Mark S. Gottlieb

  A number of years ago I went on a short vacation to Ottawa, Canada.  We stayed at the Fairmont Hotel, which is known for its elegance and convenient locale. Between the hotel and the town center was what we New Yorker’s call a coffee shop or diner.  The storefront was brightly lit, clean, and had a menu the size of a small phone book.  FYI, I grew up in a similar family business, so it was no surprise to my wife that I was drawn to this familiar scene.  As I often do, I excused myself from the table and walked around to inspect the restaurant while my breakfast was being prepared.  To my delight, the restaurant had an open kitchen and I was able to park myself in a corner and watch the kitchen staff dance with one another between the grill, sandwich board, and refrigeration units.  I was in heaven.  In case you are interested, I was a short-order cook, or what my Pop called a “griddle man”, way before business school. While returning to my table I observed a series of laminated colored pictures of the most common dishes ordered taped to the exhaust units. I quickly understood they were there so the kitchen staff would know exactly how the food should look.  My immediate reaction was, why didn’t I ever think of that?  What a good idea, especially if you had a number of shifts or stores and wanted everything to look the same.  Upon […]


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