2020 dealt a significant blow to nearly every sector of the U.S. economy, and bank stocks were possibly the hardest hit. While the overall stock market began to improve in the second half of the year, the banking sector continued to suffer.
Concerns over low interest rates and loan losses from struggling businesses created a lot of uncertainty. The result was that bank stock prices did not climb along with the rest of the market.
2020 was a pretty wild ride for all kinds of businesses.
While we’re all glad to see it in the rearview mirror, there are some after-effects regarding valuations that you might want to consider.
Many businesses report “goodwill” on their balance sheets. Goodwill is an intangible asset on a company’s books that reflects the amount of the purchase price paid for a company’s net assets above the fair value of acquired tangible and other intangible assets in a sale transaction. Unlike some other assets, goodwill does not necessarily amortize over time, but it can be worth less than its original value. (More on that in a minute.)
When it comes to the process of selling your business, there are several things that can ruin an otherwise good deal.
Over the years, we have seen plenty of deals go off the rails. It’s always an unfortunate event. Like we mentioned in our previous post, it can happen when owners and buyers can’t see eye-to-eye on the value of the business. When owners are unwilling to budge in spite of all the evidence pointing to a lower value, many buyers will simply walk away.
There are plenty of other factors that have the potential to wreak havoc on a transaction, including but not limited to:
Here’s something you don’t usually hear a transaction advisory firm say: sometimes we can’t sell your business!
It’s not for lack of preparation. At Southard Financial, we go over every client’s business situation with a fine-toothed comb to accurately determine the value range of what their company is worth.
It’s not for lack of experience. In our case, we’ve been at this for over 30 years.
“Talent wins games, but teamwork and intelligence win championships.” – Michael Jordan
In 1992, the United States assembled what has been called “the greatest collection of basketball talent on the planet.” For the first time in Olympic history, at the Barcelona summer games, professional athletes were allowed to participate.
The U.S. men’s basketball “Dream Team” was made up of NBA players who were at the top of their careers. Any one of them on their own was a superstar. All of them together were unbeatable, and they had a lot to prove.
David A. Harris and Mark A. Orndorff spoke at the 2019 Annual Fall Conference of the New South Chapter of The ESOP Association held in Orlando, Florida on October 16-17. They gave a presentation titled “Can Employees Really Impact Company Value?”
David A. Harris and Matthew L. Jakes spoke at the 2019 Spring Workshop of the New South Chapter of The ESOP Association held in Atlanta, Georgia in February, 2019 on the topic of “Valuation Appraisal Checklist – 10 Things Your ESOP Appraiser Should be Doing”
David A. Harris spoke at The Fall ESOP Forum of the NCEO (National Center for Employee Ownership) held in Albuquerque, New Mexico in October, 2018 on the topic, “Communicating Valuation: Tools, Tips, and Examples”.
David A. Harris spoke at the 2018 Annual Fall Conference of the New South Chapter of The ESOP Association held in Birmingham, Alabama in September, 2018. He led a workshop called “The People’s Roundtable Interactive Workshop – A series of ‘Build to Last’ activities that focus on developing successful communication and team building programs for employee owners of all generations.” Speakers included Dolores Lawrence, Blue Ridge ESOP Associates; Lindsay Baublitz, SCandH Capital; David Harris, Southard Financial LLC
Mark A. Orndorff spoke at the ESOP Nuts and Bolts Seminar of the NCEO (National Center for Employee Ownership) held in Indianapolis, Indiana in August, 2018 on the topic of “What’s Your Company Worth? – ESOP Valuation.”
Mark A. Orndorff spoke at the American Booksellers Association Winter Institute 2018 held in Memphis, TN in January, 2018 on the topic of Succession Planning titled “What is Your ‘End Goal’?”
