Category Archives: Business Plans

Business Valuation: Depreciation and Capital Expenses Not The Same in Terminal Year

There are many reasons for a client to need to determine the value of a company.  Revenue Ruling 59-60 is the impetus for all business valuations (appraisals).  When preparing a forecast, the future capital expenditures (typically equipment needed for growth) and future depreciation needs to be estimated. Depreciation Based on Generally Accepted Accounting Principles Economic…  Continue Reading »

Business Valuation: Not Normalizing Operating Expenses

There are many reasons for a client to need to determine the value of a company.  Revenue Ruling 59-60 is the impetus for all business valuations (appraisals).  There are three approaches that are utilized to value a business.  The three approaches are the Asset-Based Approach, Income Approach and the Market Approach.  Underneath each approach there…  Continue Reading »

Customize M&A Terms to Fit Your Needs

Make a deal Are you interested in selling (or buying) a business interest in Texas? The gap between how much the buyer is willing to pay and how much the seller expects to receive can be bridged by incorporating creative options into the purchase agreement. Earnouts A portion of the sales price is typically withheld…  Continue Reading »

6 Ways Financial Experts Can Help

Cases of business interruption Whether business interruption is caused by a natural disaster like in Houston, Texas, or another party’s wrongful act, it can disrupt a company’s cash flow and threaten its existence. The key to survival is to restore normal operations as quickly as possible, and insurance plays a critical role. The purpose of…  Continue Reading »

Growth Rate Becomes Critical to Lost Profits Calculation

Selecting an appropriate growth rate is a critical step in calculating damages in Texas commercial cases involving lost profits. However, it’s also one of the most challenging. Depending on the amount at stake and the length of the damages period, adjusting the growth rate by just a few percentage points can have a significant effect…  Continue Reading »

Surviving a Business Interruption

Damage control Many businesses in Houston, Texas will be dealing with damage control in the aftermath of the hurricane. Healthy cash flow is essential to the survival of a business. Even companies that are highly profitable on paper can’t survive long without a healthy cash flow. That’s why a business “interruption” is so dangerous. Whether…  Continue Reading »

Economic Damages 101

As many businesses in Texas already know, business disputes arise daily. Maybe a publisher infringes on a writer’s copyright, a supplier violates a provision of an exclusivity contract, or a competitor steals a trade secret. Typically, these wrongdoings result in one party losing money. It’s up to the legal system to restore order — and…  Continue Reading »

Buy-Sell Agreements: How to Cover all the Valuation Bases

It’s common for businesses, in Houston as well as other locations, with more than one owner to need a buy-sell agreement to handle voluntary and involuntary ownership transfers. It’s also important to update the agreement regularly to ensure it’s still valid and addresses all of the business valuation issues that may arise. Determine which structure…  Continue Reading »

Consider the Cost Approach in M&A

A company’s value equals the difference between its combined assets and liabilities, so the cost approach has intuitive appeal. Although a cost approach analysis is laid out similar to a balance sheet, a document that most business owners are familiar with, it requires a substantial amount of work to convert a cost-basis balance sheet to…  Continue Reading »

3 Reasons Why Selling Price Isn’t Necessarily a Cash-equivalent Value

When evaluating the time value of money, the saying “a bird in the hand is worth two in the bush” rings true. That is, depending on an investment’s risk and payout period, $1 paid out today could be worth more than $2 promised to be paid far in the future. Wondering how this concept relates…  Continue Reading »

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