Does your business have an up to date buy-sell agreement? Buy-sell agreements are the most important, but perhaps most overlooked agreement that a business can have. These legal documents protect business owners when one owner leaves the company for any reason. This post covers...

  [caption id="attachment_2812" align="alignright" width="300"]increase the value of your business Reducing costs can help you increase cash flow and, as a result, the value of your business.[/caption] The value of a business is based on two factors: the expected future cash flow of the business and the risk that future cash flow will occur when and in the amounts expected. Cash flow and risk are the meat and potatoes of business valuation. The valuation report that is produced is just a detailed analysis of these factors.

  [caption id="attachment_2747" align="alignright" width="300"]Getting a NJ divorce? Beware of double dipping New Jersey courts allow double dipping: the nontitled spouse receives their share of business value, which is based on future income, and on top of that, receives a portion of that very same income as it is earned.[/caption] In a divorce case in which one spouse owns a business, the business is generally subject to equitable distribution; that is, each spouse receives their equitable share of the value of the business. Practically speaking, this does not mean that the business is sold and the proceeds divided but rather, that the nontitled spouse receives money or other property equal to their equitable share of the business value. The problem arises in the conflict between the income stream used to value the business and the income stream used to calculate spousal support.

  [caption id="attachment_2355" align="alignright" width="300"]business valuation Rules of thumb may be easier, but considering factors such as cash flow and risk lead to a more accurate business valuation.[/caption] From time to time, I receive a call from someone who wants me to tell them the value of a business that they want to buy or sell. They provide a few items of information, such as last year’s sales or net income and expect that I will apply a multiple to quickly and easily come up with a value*. What they are asking me to do is apply a rule of thumb.