Chief Valuation Officer Cracks Midmarket Equity Value Creation Code Surpassing $4.5 Billion
Dr. Carl Sheeler explains how business owners discover hidden value and leverage knowledge
SAN DIEGO, July 30, 2013 /PRNewswire/ -- Among the top challenges facing business owners is growing profitable companies. The first hurdle is $10 million in revenues. Being the chef, cook and bottle washer often exceeds the owner's capacity and time due to business and life complexities. The top trusted advisor, usually the accountant transitions to the attorney who addresses more complex structural issues. Near $20 million, the owner often needs a #2 to provide skill redundancy simply to maintain the company at this level. The company accountant becomes a controller and then Chief Financial Officer. A foreman or sales director is promoted to a Chief Operating Officer. Each has unique skills to support the CEO's vision, so s/he has more time to work ON versus IN the business. External guidance proactively sought and executed can augment their capabilities. So, why do so few companies grow to 9- and 10-figure companies? Knowledge and priorities.
Most owners and attorneys assume Accounting is synonymous with Operations and Finance. They're not. Trust occurs due to the periodic necessity of financial and tax reporting. CPAs primarily provide backward looking compilation and reporting services. Therefore, reliance is akin to navigating by looking in the rearview mirror. And, most owners are unaware attorneys have a Liberal Arts, not a Finance or Business degree. Focus is often on adherence to rules and regulations. They seldom fully understand how intangible value is created from relationships and knowledge.
Carl Sheeler, PhD, ASA opines, "The two most revered trusted advisors, the CPA and legal counsel, are masters at reducing taxes and providing needed business structure. These services are warranted. But, they become leveraged when all players acknowledge what they know and don't know. The great ones seek to measure and manage risk. This means retaining outside expertise to benchmark company value; especially, intangible assets. Business Valuations, Ltd. comes in as the outsourced Chief Valuation Officer (CVO). This is important with many companies changing hands."
Most of the thousands of business valuation practitioners are accountants. Many apply a rudimentary process that produces a valuation opinion derived from adjusted earnings and a price multiple and rate. Sheeler states, "We've successfully created +$4.5 billion in enhanced value by uniquely identifying and quantifying risks through our in depth due diligence. Once owners and advisors know the specific risk's impact to the company value, such as high labor costs, client or vendor concentrations, unprotected intellectual property and dated/inaccurate legal and financial documents, they can prioritize which they will address. Owners are happy as their advisor's knowledge is leveraged which provides a discrete and oversized return on their professional fee investment. The CVO may then come in on an annual or as needed basis and determine progress with truly customized metrics. We have literally identified $200 million in one company's hidden value that would take six to 18 months to extract. The CVO is the value architect and provides a clear roadmap for company growth - a win-win for the C-suite and owners alike. Now that's a great 'value.'"
Business Valuations Ltd. has seven offices nationwide. Since 1954, it has served midmarket business owners and their advisors for tax, transaction, transfer as well as dispute purposes. Dr. Sheeler has been the firm's steward since 1992 having completed 1,000+ valuation reports and testifying 160 times as an IRS/Court expert. He authored the Valuation Chapter for the AICPA's and California Bar's Succession Planning Manuals and was a Worth Magazine leading advisor.
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SOURCE Business Valuations Ltd.
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