{"content":[{"text":"Shenehon’s Joshua Johnson offers insights \n on business valuation matters","bbox":{"left":0.102941,"top":0.084295,"width":0.6381760000000001,"height":0.057409}},{"text":"(Editor’s note: Joshua R. Johnson, ASA, Senior Busi- \n ness Valuation Analyst at Shenehon Company, was \n recently interviewed on business valuation matters by \n Morgan & Westfield, a firm with locations throughout \n the nation that specializes in the appraisal and sale \n of small to mid-sized, privately-owned businesses. \n Below is an excerpt of the interview.) \n Q  \n Do you have any other tips or advice for anyone \n buying, selling or appraising a business? \n A  \n There are two that we frequently encounter. \n First, pay a respectable local CPA firm to audit \n or review your financial statements if you are not \n already doing so. This is critical for easing the minds \n of prospective buyers in terms of their ability to trust \n what you tell them. QuickBooks printouts are nice \n for a quick analysis of the operations, but closing the \n deal still rests on financial statements that are have \n been assured by an unrelated third party. If this is too \n cost prohibitive, U.S. federal tax returns are another \n great source of financial \n documents to provide, for \n obvious reasons. \n Closing the \n deal still rests My firm provides a fair \n amount of valuations for \n on financial \n bank clients extending \n statements that \n Small Business Adminis- \n are have been \n tration (SBA) financing \n assured by an for smaller acquisitions, \n unrelated third and a significant amount \n party. of these rely on federal \n tax returns. However, tax \n returns have very broad \n categories and rarely pro- \n vide the level of detail that CPA-prepared statements \n do, and a significant amount of explanation is gen- \n erally required to supplement these financial state- \n ments when used for valuation purposes.","bbox":{"left":0.10088,"top":0.169823,"width":0.397691,"height":0.71322}},{"text":"to four years before you intend to sell the business. \n I cannot count how many times a business has trans- \n acted for a lower price than it could have attained due \n to financial statements that \n had far too many personal \n and non-business related \n Clean up your \n expenses ran through the \n income statement. company financial \n statements \n Trust me, I get it, the \n three to four \n perks of being a small busi- \n ness are owner are numer- years before you \n ous and include the ability intend to sell the \n to run your entire family’s business. \n cell phone bill through the \n business, along with your \n wife, son and daughter’s \n vehicle repair costs. But unless these expenses are \n adequately documented with supporting payment \n slips (which buyers do not want to deal with), it is \n extremely hard to translate this into value for the seller. \n As such, it is best to remove these expenses from the \n income statement altogether a few years before the \n sale. It is very important for sellers to understand this, \n as an astute or aggressive buyer will use that against \n the seller and push for a lower transaction price. \n Q  \n What do the alphabet soup of business valu- \n ation designations mean? Are they important \n when choosing a business appraiser? \n A  \n In the appraisal and valuation profession, there \n are several acronyms following the names of \n many practitioners. In my case, for example, I have the \n letters ASA after my name. This stands for Accred- \n ited Senior Appraiser and is issued by the American \n Society of Appraisers, one of the oldest professional \n organizations in the industry. What this means, is \n that I took four classes, passed four comprehensive \n exams, passed an ethics exam, submitted a log detail- \n ing five years of active work experience in the pro- \n fession, and submitted a demonstration report for \n review by two of my peers. Needless to say, this takes","bbox":{"left":0.519181,"top":0.169823,"width":0.39771600000000007,"height":0.758991}},{"text":"This leads to my second tip. Please, please, please \n clean up your company financial statements three","bbox":{"left":0.102935,"top":0.892992,"width":0.39544199999999996,"height":0.03582200000000002}},{"text":"2","bbox":{"left":0.102941,"top":0.947917,"width":0.009836999999999999,"height":0.017513}},{"text":"Valuation Viewpoint","bbox":{"left":0.148693,"top":0.949211,"width":0.169897,"height":0.015761000000000025}},{"text":"Volume 20, Number 2 • September 2015","bbox":{"left":0.570287,"top":0.949211,"width":0.34638199999999997,"height":0.015761000000000025}}],"images_bbox":[],"images_bbox_not_text_overlap":[]}