February 26, 2021

Know Your Valuation

Know Your Valuation

As we enter the month of March, historically our busiest month of the year, many of us at Marcum are burning the midnight oil, with busy season in full swing and many clients submitting second-round PPP applications on top of that.

Although all eyes are on financial reporting and tax filing deadlines right now, it’s important to make sure that your company isn’t neglecting other essential business strategies. An important one is understanding your business’s valuation.

With the next round of stimulus moving forward quickly and the vaccine roll-out continuing, the economy is going to continue to improve. If your business managed to survive and, hopefully, thrive during the pandemic, you may find yourself fielding inquiries from interested buyers in the months to come.

Even if you’ve never given serious thought to selling, it is never a bad idea to get a professional valuation, so you know the fair market value of your business. That will give you a sense of the options in front of you. If you find out that it’s not a good time to sell a business in your industry, you may want to start doing the legwork to prepare your business for sale in a few years. Running a middle-market company is demanding, and there may come a point where other priorities and quality-of-life concerns are top-of-mind.

If you are thinking about a professional valuation, I’d strongly encourage you to check out the Valuation & Litigation Advisor section of our website. Our team puts together a monthly report on relevant topics, like our recent piece on First Steps in Understanding Your Business Valuation. Business valuations rely on quantitative analysis, but there are subjective elements, too, and I encourage every leader to become familiar with the basics. Understanding what moves the needle on a business’s value will help you decide where to focus your efforts. Taking steps such as improving your recordkeeping can have a surprisingly large impact, and many can be outsourced if you don’t have the bandwidth.

If you are thinking about selling, Employee Stock Ownership Plans (ESOPs) can be an appealing exit strategy and can be a powerful way to motivate and incentivize employees. Employees with expertise in the inner workings of your business can be ideal owners. If this is an avenue that interests you, I encourage you to reach out to our ESOP Valuation Services through your Marcum professional.

It’s been hard to plan big moves like exit strategies during the past year, but once the world opens up and the wheels of business start turning at full speed again, things are going to change very quickly. Most owners find that any time they spend understanding their options and looking ahead is time well spent, no matter what’s going on in the present moment.

Stay safe, stay healthy, and remember, we’re all in this together.

P.S. Marcum just issued our annual 5-Year Nursing Home Statistical Analysis. This report from our national healthcare practice aims to help long-term care providers improve both operational and financial performance and to guide their strategic planning. If you’re interested in the nursing home sector, it is well worth reading.