Blog Archives - Page 2 of 6 - Southard Financial

How to Understand Adjusted EBITDA and Use It To Your Advantage

Written by Southard Financial on September 30, 2021. Posted in Blog.

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.

How Improving Your Debt to EBITDA Ratio Can Help Boost Your Business

Written by Southard Financial on September 21, 2021. Posted in Blog.

A common phrase you hear in business is “you have to spend money to make money.”

Unfortunately, too many small business owners spend more money than they actually have…all in the name of getting their company off the ground or taking advantage of the next perfect opportunity. They hope that the money they bring in tomorrow will cover the money they’re spending today.

The end result of that kind of business strategy is a lot of debt.

One company owing money to another isn’t a cardinal sin of doing business. It happens all the time. For this post, we want to focus on how much debt is reasonable as a percentage of a company’s overall EBITDA (a common measure of cash flow derived as earnings before depreciation and taxes, depreciation, and amortization).

Why You Need to Be Using Business Value as a Benchmark of Growth

Written by Southard Financial on July 26, 2021. Posted in Blog.

What if you had a quick way to measure how your company is performing from year to year?

An often-used phrase in business is that you can only “expect what you inspect.” If you aren’t regularly checking to see how well your company is doing, you are missing out on valuable information and quite possibly setting yourself up for trouble.

By using your business value as a benchmark, you can quickly check the pulse of your company and tell if it is generally healthy and improving year by year or has problems that need to be addressed.

Bank Stocks Are Finally Improving After a Tough 2020

Written by Southard Financial on April 21, 2021. Posted in Blog.

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.

Why Goodwill Impairment Really Matters and The Best Way to Measure It

Written by Southard Financial on February 26, 2021. Posted in Blog.

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.)

How to Avoid These Common Business Selling Deal Breakers

Written by Southard Financial on January 14, 2021. Posted in Blog.

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:

Why You Need to Be Realistic About the Value of Your Business

Written by Southard Financial on December 19, 2020. Posted in Blog.

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.

Why Deals Die

Build a Dream Team When It’s Time to Sell

Written by Southard Financial on December 11, 2020. Posted in Blog.

“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.

Why You Need to Plan Your Financial Future Today

Written by Southard Financial on December 2, 2020. Posted in Blog.

Bob had built a booming business before he died.

It was something he’d built from the ground up with blood, sweat, and tears. He had grown from a single truck with some tools into one of the area’s most reputable fine home builders, with multiple crews working all over the city.

He was the 100% owner, and had run the company solely for the benefit of his family’s lifestyle. Many wonderful memories with his wife and kids were made possible by the income his business generated.

New Bank Deals Trending in the Right Direction

Written by Southard Financial on September 28, 2020. Posted in Blog.

In the first eight months of 2020, M&A activity in the banking sector essentially ground to a halt.

The industry saw 173 transactions worth over $45 billion take place from January to August of 2019. So far this year, however, there have only been 66 transactions valued at a total of $7.44 billion.

Considering that the last three years have generated a significantly greater number of deals (255, 254, & 257 respectively), 2020 has some catching up to do. But in all fairness, those other years didn’t have worldwide pandemics to contend with, nor did they see entire economies turned upside down.