Author: Southard Financial

For most business owners, having an appraisal done is something they’ll only experience once…maybe twice…in their entire lives. Unless you’ve bought and sold several businesses, it’s not something you’re likely to have a lot of experience with.

So how do you know what to look for in an appraisal firm? We’re here to help you with some valuable information so you can search with confidence and partner with a firm that’s a great fit for your situation.

It is no secret that inflation and its ripple effects are sweeping across our nation with no signs of stopping anytime soon. The cost of everything in our day-to-day lives has skyrocketed, and the costs associated with running our businesses are no different.

In an effort to slow the impact of the current inflationary climate, the U.S. Federal Reserve Bank (the “Fed”) has moved to increase interest rates for the first time in 4 years (with additional rate hikes expected well into 2023). Is there a connection between rising interest rates and the value of your business?

We believe there is, and it’s in your best interest to pay attention to the rates of interest!

Now that we are well into the 1st quarter of 2022–and the numbers from 2021 are in–we can take an objective look back at last year’s M&A activity.

A report from GF Data released just this month gives us a good overview of what happened in 2021 and what we might be able to expect from M&A deals this year. GF Data is a reliable source that we frequently go to for information on middle-market transactions in the $10-250 million range. Their insights help us serve you better, so let’s take a look!

For thousands of years, people have entered into business arrangements. And for just as long, many of those arrangements have gone bad at some point.

That’s why buy-sell agreements exist.

Bank Merger & Acquisition (M&A) activity skyrocketed in 2021! After a long 2020 where the world experienced a very disruptive financial crisis, many buyers and sellers were apparently eager to finalize deals they had either put on hold or hadn’t previously considered at all until now.

The COVID pandemic has altered more than our health habits. According to survey results from S&P Global Market Intelligence, it has dramatically changed the way we bank as well.

As we mentioned in our last blog post, 2 Big Reasons Banks Will Be Holding Excess Cash in 2022, banks are seeing more customers interact with their services digitally instead of physically. When the entire country was in lockdown for much of 2020, and later when many people simply weren’t comfortable spending much time in public places, a lot of customers began doing most (if not all) of their banking online.

People are holding onto their money, businesses are in a holding pattern, and banks are seeing a drop in lending activity.

Those are the basic conclusions of a recent 2022 Banking Industry Outlook report released by S&P Global Market Intelligence. Their study analyzes current trends in banking behavior and uses those patterns to try and forecast what we can expect as we move into the new year.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) has become the standard value metric when it comes time to sell a business.

It is what both buyers and sellers look to in order to determine the value of the company in question. While many factors come into play when a business changes owners, nothing gives everyone involved a better snapshot of that company’s health and value than its EBITDA.

Generally speaking, the higher the EBITDA, the higher the price. Valuation companies like ours apply industry-standard multipliers to the EBITDA of the business being sold to arrive at its current market worth. That’s a simplified explanation, however, and things are rarely that clear cut.