Businesses Appraised by CMEAs

A CMEA is a Certified Machinery & Equipment Appraisal. It can tell you the fair market value, liquidation value, salvage value, or replacement cost of the equipment and machinery used by your company or business. A CMEA prepared by a professional and licensed appraiser meets the requirements of financial institutions, government agencies, buyers, sellers, shareholders, partners, and the IRS, and will withhold scrutiny in court.

There are many different types of businesses that can benefit from a business appraisal, including many that are out of the ordinary, such as (but not limited to):

• Aerial Spraying Services
• Asphalt Plants/Sand Pits
• Candy Shops
• Chemical Manufacturers
• Chemical Distributors
• Country Clubs
• Dental Practices
• Donut Shops
• Gasoline Stations
• Historical Buildings
• Ice Cream Stores
• Janitorial Companies
• Machine Shops
• Maid Service Franchises
• Mall Specialty Shops
• Medical Clinics
• Millwork Shops
• Moving and Storage Companies
• Oil and Gas Refineries
• Refuse Hauling Companies
• Rock Quarries
• Rodeo Stadiums
• Supper Clubs
• Swimming Pool Builders
• Wallpaper Stores
• Well Drilling Companies
• Well Servicing Companies
• Woodworking Shops
• Wrecker/Towing Services

Irrespective of your business, a CMEA is the best way to assess the value of your company’s assets. To request a CMEA, contact Present Value today.

By: Present Value

Tags: certified machinery & equipment appraisal, CMEA, types of businesses
Posted in Machinery & Equipment Appraisal | No Comments »

SBA Starts Waiting List for Small Businesses Seeking Loan Breaks

On Friday, the Small Business Administration announced that it had just about run out of money for the small business loan incentives – 7(a) and loan fee reductions – enacted last year by the economic stimulus package, and that a waiting list will be established for those small businesses seeking credit should more money become available.

These incentives were designed to reduce the fees on loans to small businesses and offer a 90% guarantee to banks that make SBA loans, making loans less expensive for borrowers and less risky for lenders. The normal guarantee for the average 7(a) loan is 75%.

The original $375 million in funding set aside last year for these two measures initially ran out in November, so the SBA set up a waiting list. In December, when another $125 million was put toward keeping the programs running through February 2010, there were more than 1,000 businesses on the waiting list.

The Senate voted to advance a $15 billion job-creation package Monday, but the funds for another extension of the SBA loan incentives were stripped from the package prior to the vote. So as of now, it remains to be seen if those businesses on the SBA waiting list will receive their loans.

These SBA loan breaks revived SBA lending, and enabled small businesses to get access to capital that they had previously been unable to get. Because of the breaks, 7(a) lending is up by 90% since the stimulus plan was enacted despite the fact that other loan activity has declined. Small business groups and many lenders believe these incentives are key to economic recovery and are urging Congress to appropriate the funds to keep the program alive.

Present Value LLC is a certified appraisal company and provider of business valuation services.

By: Present Value

Tags: Business Valuation, economic stimulus package, present value, SBA, small business, small business loan incentives
Posted in Business Valuation, SBA, Small Business Administration, economic stimulus package, small business, small business loan incentives | No Comments »

Perception Versus Reality

News over plummeting home values has home owners – especially those in the Northeast – feeling a little more pessimistic than reality warrants, according to an article posted today on Banker & Tradesman. You can read the full article here. According to the article, a Zillow survey showed that just 20% of homeowners felt that their homes increased in value during 2009, but in reality, 28% of homes increased in value.  

Of the surveyed homeowners in the Northeast, 78% said they believe that their homes’ values either decreased or stayed in the same in 2009, but data shows that only 58% of homes in the Northeast stayed the same or decreased in value. 

It seems that people are realizing that right now, decreasing home values are the norm rather than an aberration. However, despite the cynicism the survey shows, three times as many homeowners believe their property values will increase over the next six months than those who believe their home values will decrease or stay the same. These beliefs may outpace performance, but it’s nice to see that people still view home ownership as a solid investment. 

By: Present Value

Tags: home value, home values, Zillow
Posted in Real Estate Appraisal | No Comments »

Charitable Contributions

Just as an individual is allowed tax deductions for charitable donations, a business is afforded the same opportunity. A business’s charitable donations are a little different from an individual’s, though. A business can make three types of charitable contribution: services, cash, or property.

If a company contributes its services to a charity, it is not entitled to a deduction for those services, but can deduct non-reimbursed expenses incurred in rendering them. If a company contributes cash, it may deduct a contribution that is up to 50% of its adjusted gross income. If the company contributes appreciated property (a property that has experienced an increase in value), it is entitled to deduct the value of that property for that tax year.

Of course, determining the value of property donated as a charitable contribution requires an appraisal of that property. Defensible documentation of the property’s value is required by the IRS.

Present Value LLC is a full-service appraisal firm that can help you determine property value for tax purposes.

By: Present Value

Tags: charitable contributions, taxes
Posted in Tax issues | 1 Comment »

Buying a Business? Make Sure to Do Your Homework

It may seem easier to purchase an established business than to start one from the ground up. While this may be true in some cases, there could be problems with an existing business that may not be clear upon first look. However, oftentimes purchasing a business can end up being just as costly and labor intensive as a startup. Sometimes there are inherent flaws in a business, which is why it is up for sale. As when starting a new business, you need to conduct the proper research and due diligence on any company that you may be thinking about purchasing, which includes getting an unbiased business appraisal of that company.

We’ve written multiple posts on why it’s important for a business owner to know the value of his or her business. It’s equally important for a potential buyer to understand the value of a business that he or she is considering for purchase and to know what he or she is getting in the deal.

Of course there are many things to take into account when contemplating buying a business, such as your own strengths and weaknesses, your understanding of business fundamentals, and your understanding of the potential market in which the business operates. Obtaining a professional business valuation can help you better understand the ins and outs of a particular business, like a business’s cash flow, the value of its assets and/or equipment, how the company acquires customers, and the market in which it operates.

If you’re thinking about buying an established business, get an appraisal. You need to know what you’re getting into.

By: Present Value

Tags: business appraisals, Business Valuation, Buying a Business, equipment appraisal, present value, selling business
Posted in Business Valuation, Buying a Business, business appraisals | No Comments »

Five Myths of Business Valuations

SCORE, an informational organization that caters to small businesses, has a great article on its website about the myths of business valuations. The myths it lists are:

Myth 1 – Valuing a private business should only be done when the business is ready to be sold or a lender requires a valuation as part of its due diligence process.

This isn’t true. Effective financial planning requires regular valuations. Especially if a change in ownership is expected. We’ve written about the different occasions, other than at the time of purchase or sale, when a valuation might be necessary here, here, and here. 

Myth 2 – Businesses in my industry always sell for two times annual revenue (the revenue multiple). So why should I pay someone to value my business?

Often, the numbers you see when determining sale prices in your industry are median sale prices. Your business could have a value much different than the median sale price in your industry. 

Myth 3 – A local competitor sold his business for three times revenue six months ago. My business is worth at least this much!

A lot can happen in six months. Economic conditions can shift quickly and you may be selling your business in a much different environment than your competitor did six months ago.

Myth 4 – How much a business is worth depends on what the valuation is used for.

A business’ worth is determined by its fair market value, which, if determined properly, should be the same no matter what the valuation is used for.

Myth 5 – Your business loses money, so it is not worth much.

Sometimes, it may just appear that your business is losing money. When you take a look at discretionary expenses, you will likely find quite a bit of cash generated by your business.

Don’t believe the myths. Get the facts about your business’ worth with a professional business valuation.

You can read the full article on the SCORE website here.

By: Present Value

Tags: business valuation myths, business value, business worth, SCORE
Posted in Business Valuation | 1 Comment »

CMA vs. Appraisal

Because they’re so similar in nature, there’s often confusion between a comparative market analysis (CMA) and a real estate appraisal. It’s important to understand the distinction if you’re selling your home.

A CMA is a report that is prepared by a real estate agent. After doing a walkthrough of the property, the agent will research information about comparable properties in the area, usually with an industry resource called the Multiple Listing Service (MLS). This includes properties currently for sale, listings that have sold but not yet closed, and properties that did not sell during a listing period.

This is similar to what a real estate appraiser does, but there are important distinctions. A CMA generally gives a price range, whereas an appraiser’s report gives an actual set market price. CMAs are subjective, and often contain a list of improvements to the property that the owner plans to make, and qualities of the property that the real estate agent believes are selling points.

A Uniform Residential Appraisal Report (URAR), prepared by an independent professional appraiser, is a comprehensive evaluation of the property. It is much more empirical and objective, and will withstand scrutiny in court. In any real estate transaction, it is crucial to have a proper appraisal performed. A CMA can give you a general idea of a property’s value, but only a report from a certified appraiser can give you the specific information you’ll need going forward.

Present Value LLC is a certified real estate appraisal company.

By: Present Value

Tags: cma, comparative market analysis
Posted in Real Estate Appraisal | 1 Comment »

Got a Startup? Get a Business Valuation

Most people generally only think about having the value of their business appraised at the time of a potential sale or acquisition. As we have talked about in previous blogs, there are numerous situations in which a business owner must think about getting a business valuation, including when selling a business, for estate planning purposes, and when planning exit strategies. However, something that most people don’t realize is that startup businesses can benefit greatly from undergoing the process of a business valuation.

For a startup company, a valuation can be used as a business performance indicator, reflecting the company’s direction. It can help business owners figure out what’s working and what’s not, and where resources should directed or re-directed. A valuation can also give a deeper, more complete understanding about the competitive forces and drivers in the business’s market.

For any company, a business valuation can provide a snapshot of the business within the context of the market and industry in which it operates, in addition to evaluating the health of the market itself. This can help business owners at any level determine if the initial opportunity is still present and/or whether or not an exit from the business and the market is warranted.

It may be a wise decision for startup business owners to incorporate business valuations on a somewhat regular basis to determine if the company is achieving its desired trajectory.

By: Present Value

Tags: business appraisals, Business Valuation, estate planning, exit strategy, present value, startup business
Posted in Business Valuation, business appraisals | No Comments »