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Business Evaluations
360 Plays3 years ago
What is your business worth? It’s not only a relevant question if you were trying to sell your business, but it’s knowledge that can also help you effectively manage a business you want to stay in. Yet, 60% of businesses have never had their business valued. Patti Bell, a 30 year veteran of business evaluation with Principal Financial, is here to change that.
In this episode we talk to Patti about when business owners should have an evaluation done and how often to refresh it. Also, how those results can influence key things like the structure of the business agreement as well as the types and levels of insurance needed to cover the true business value and attract talent in an increasingly competitive job market. Finally, we’ll cover the fundamentals like what business owners need to provide for the valuation (it’s simple stuff you already know or have on hand) and how this compares to a certified business evaluation.
If you’re interested in having Patti and her team do a free evaluation of your business, you can work through your current advisor or contact phillip@uncommonwealth.com to see if Uncommon Wealth Partners are the right fit for you and your business.
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Transcript
What is an Uncommon Life?
00:00:02
Speaker
Everyone dreams about living an uncommon life, but how we define that dream is very different for each of us. And for most, it's a lifelong pursuit.
Introducing the Podcast and Hosts
00:00:11
Speaker
Welcome to the Uncommon Life Project podcast. We're going to introduce you to people who are living that life or enjoying the journey to get there. We're going to also give you some tools, tricks, and tips for starting or accelerating your own efforts to live an uncommon life.
00:00:27
Speaker
A life worth celebrating and savoring. Please welcome your hosts, Brian Doohurst and Philip Ramsey.
00:00:36
Speaker
Hello and welcome everybody to another episode of the Uncommon Life Project where I am your host, Phillip Ramsey. And I am Brian
Meet the Guest: Patty Bell
00:00:42
Speaker
Dewhurst. We have an amazing guest for you today. I'm excited. I can't, I know, I can't wait. I think it's really gonna be really, it's gonna hit a lot of listeners right where they're at because I feel like especially in Brian and I's business, we feel like there's a value to our business.
00:00:57
Speaker
We don't really know what that is. What even what do we do with it once we have it. Right. And so our guest today is like expertise is valuing businesses. Her name's Patty Bell. Brian's going to do the bio because he's way better than I am. And then we're going to jump into it. So much pressure when you said well.
00:01:15
Speaker
Yeah, it's tough. But guys, thank you for being on, folks. I always say, guys, I got to stop that, folks. Thanks for jumping on this. We hope that this is valuable to you. Obviously, we're financial advisors that really do think that you are your best asset. And so when that happens, a lot of people start starting their own businesses, start bringing their passions out, and then being able to impact the world. Man, that's where Brian and I sit. That's our hot spot. We love it. And, OK, Brian, bio. Let's get Patty on. Let's do it.
00:01:43
Speaker
All right. Patty is a CPA and leader in business and advanced solutions at Principal Financial Group here in Des Moines. She specializes in helping financial professionals on business planning, executive benefits, and estate planning. Welcome to the show, Patty Bell. Awesome. Thanks for having me, you guys.
00:02:00
Speaker
Oh, well, first we need to tell like shout out to the people that connected us because I feel like that's fun. Rick Cordero, the connector of all connectors, Rick Cordero, former guest on the podcast as well. He was. You love Rick. We love Rick. Tell us how you met Rick for the first time only because it's fun.
Patty Bell's Career Journey
00:02:20
Speaker
Well, I actually know Rick in a couple of different ways. So
00:02:23
Speaker
I've been at principle a really long time, about 36 years, and Rick has been there a long time too. And he started helping people protect their income, and that was right in my wheelhouse. And so we started working together. And then as we started working together, we found out my neighbors, when I first moved here from the Northeast,
00:02:50
Speaker
we're friends of his. So we kind of know each other a couple of ways. I mean, who isn't friends with Rick? You know, I get it. I get it. You're like, so what's that seven separations from the seven degrees of separation of Kevin. It's about two degrees of separation with Rick Cordero. That's right.
00:03:06
Speaker
Well, okay, I really kind of want to start. I think that's a great place to start because this hasn't been your full-time thing ever since 36 years ago that you started Principal. Is that right? Like what was your first gig? It was mutually funded, the company. Now it's shareholder owned. So that transition has probably been different. But what has your career path been up to this point?
How Does Principal Help Business Owners?
00:03:28
Speaker
And how did you get into business valuations? Thanks for asking. So I came to Principal right from college.
00:03:37
Speaker
And at the time that I joined Principal, there were a couple of big tax acts, so tax reform of 86, tax reform of 88. And part of my responsibility was to help us calculate cost basis properly because a lot of those, you know, and that's an exciting time. I'm just here to tell you tax reforms.
00:03:59
Speaker
We don't know anything about tax reform now. Like what are those? And so I helped, um, make sure that our cost basis and our reporting was accurate. Um, and then I kinda, that was kind of on the post sale side of things. And then, um, about 20 a lot, a years ago, I switched from a post sale side to a pre-sale side.
00:04:25
Speaker
And so I got a little closer to the sale. It was a little more exciting to help financial advisors with their clients. From a company perspective, it just kept growing. And so as we went from a mutual company to a publicly traded company, just that balance of looking at shareholders, looking at clients, and looking at employees that just kept
00:04:54
Speaker
that balance is maybe just transitioned a little bit. I would say a little bit. So tell me when you started going into business valuation, what was the genesis of trying to like, why? Like it has to be a reason. There was a lot of people maybe wanting it. And then why did you jump into it? And then tell us kind of the trajectory of the department itself. Sure. So the department that I'm in is called business and advanced solutions.
00:05:20
Speaker
And almost every major carrier has a department like this. We're attorneys and CPAs. When I joined the department, I was the first CPA and the leader at the time said, you know what, we've been helping clients with kind of an estate planning focus. We're going to transition and start helping them business owners. So we're going to need both disciplines, the attorney side and the CPA side. So I've been kind of,
00:05:48
Speaker
an odd duck, as you might say, because it was... Dare you say uncommon. Dare you say... Uncommon. It was an uncommon, yes. And one of the things that we started doing and we've been doing them regularly since 2006, but one of the reasons we started is that business owners don't know what their business is worth. About 60% have never had their business valued.
00:06:18
Speaker
And because of that, that's kind of a hurdle from doing planning. And so we found that if we help business owners understand what the business is worth, it might help them take the steps to do some planning.
00:06:34
Speaker
It's brilliant. And I want Brian to ask questions, but I feel like this is the time, six minutes into this podcast, to tell you, guess how much it is for them at Principal to do a business valuation on your business. Brian, you want to guess? I think I know the answer. You know the answer. Okay. I think it's free. It's free. This whole thing is free. And so I love the barrier to entry.
00:06:56
Speaker
Because it's so easy because it's free because it's free now that I know what the listeners thinking. Why is it free? Nothing is free. Nothing's free. The freemium is never free. Right. So why are you offering this at no cost Patty? Um, because, so this is an informal business valuation. It is, we do, um, about 2000 of them a year.
00:07:21
Speaker
And we do them at no charge because we want people to do planning. And we found that this is just a great way for us to start it. And then for the client to take the valuation to their advisors and say, we need to start something because I've got something important to me that I need to protect. And that's part of the reason because we found it kind of helped people get a grasp of what it's worth.
00:07:51
Speaker
and start planning. That's kind of the reason. And so from a complimentary valuation standpoint, a lot of the valuation methods we use are not ones that I developed or that principle developed. These are industry standard formulas that are used all over the US.
00:08:18
Speaker
When you kind of have to have it that way, because you are evaluating so many different businesses from financial services to real estate. I mean, it seems like it could be anything, right? To cleaning. Window types of businesses are valued in different ways. For sure. For sure. So, um, we've had, you know, the world is a data analytics world now, and that's a big change from, you know, when I started, um, with the company.
Why Start Business Valuations Early?
00:08:46
Speaker
And so if I look at our industries that we've been tracking since 2015, service manufacturing and construction are the top industries and they have been leading since 2015. That's awesome.
00:09:03
Speaker
What, um, I have so many kind of questions here. I'm trying to like, lay this out and it's hard when I ask all the questions, you know, and Brian poor, Brian has all these questions that I run him over more of the technical side, but when should a business owner start to like, think about this as a,
00:09:22
Speaker
as an action step in terms of like risk management, wealth management, you know, financial planning. Is it based on how many years they've been operating? Is it a size thing? Is it a revenue thing? What does that look like? I think it's kind of a years in business thing because kind of out of the gate, you kind of have to know how am I getting in to the business and then how am I going to get out? Right.
00:09:52
Speaker
And in those documents that you, um, the articles of incorporation, the partnership agreement, um, and maybe even your, uh, schedule C, uh, sole proprietor, you have to have some thought about, I'm going to do this. I'm an entrepreneur. I'm going to, I'm going to create something that is of value because that's what entrepreneurs do, right? They've got an idea and they act on it. And as they develop this business and,
00:10:21
Speaker
having an idea of how I'm going to get out and the business becomes a big part of their livelihood, their lifestyle. So knowing how you want to protect your lifestyle, we know business owners care about protecting their business, protecting their employees, protecting their lifestyle. So when those three things are very dependent on the business, that's a very good time to start.
00:10:46
Speaker
Yeah, that's great. I like that action ball. Yep, that's me. When we've seen we have, you know, lots of different clients all over the US and in different, you know, spots in their business. And we have some people that, you know, I would say like serial entrepreneurs who have, you know, started several companies and sold
00:11:05
Speaker
started a new company, got it two to three times bigger than the previous company, sold it, done that kind of trajectory where they're doing venture capital funding or angel investing, that type of thing. It's very valuation driven as we look at that process to go public or IPO in the United States. That is when the valuation is, I think, very clear and you're really trying to drive that
00:11:32
Speaker
you know, from the beginning in those entrepreneurs, you know, are starting it with that in mind at the forefront.
00:11:40
Speaker
knowing they're not probably going to be the one to take it to, you know, its final stage. But then you have a lot of other people that are really, you know, truly just kind of self-employed, but there's a valuable business there, your chiropractors, dentists, eye doctors, all of that type of stuff, even financial advisors. So, that to me is where, you know, I think the most loving thing you can do in financial planning is preparing your estate or something, you know, when something happens to you, we call it graduating.
00:12:07
Speaker
And knowing too, what kind of what you just said, this is some of the most loving thing you could do to your clients, your employees, ultimately your family is starting to plan in the exit of your business. Right. It truly is. Brian, that made me think of a couple of dentists that I worked with in Georgia and they were two brothers. Is it okay if I just give you guys an example? Oh, I'd love to. Yeah, please do.
How Business Value Impacts Personal Decisions
00:12:34
Speaker
Okay. So, um, I did evaluation for these two brothers and we were going through the report and I could just tell from the brothers, they're like, yeah, so, so it's $3 million. So what? Yeah. And, and, and so I said, okay, well, let's, let's kind of take a step back. Um, are you guys married?
00:12:56
Speaker
And the one brother said yes, and the other brother said no. And I said, so, okay, married brother, do you have a will? And he said, yeah, I do. And I said, oh, okay, so you leave everything to your wife, right? And he said, we know where this is going. Keep going, Patty. Keep preaching it. And he said, yes. And I said, oh, that's amazing. So she's a dentist.
00:13:23
Speaker
dead silence. No, she is not. She is not. And he's, and I said, well, since she's not a dentist, she can't be an owner. Wait, what? And then I said to the younger brother, and so that means you, if we don't do anything, you are going to be in business with your sister-in-law. And then, you know, we started asking a lot more questions. So sometimes,
00:13:53
Speaker
knowing the value is one thing, but knowing the impact of what it actually means for them personally, that seemed to really resonate with them. So just that step back to go, okay, now let's talk about it.
00:14:08
Speaker
Right. Yeah. And that's why I think it's neat that you guys work with the advisor because that's really the ultimate like goal is to get them to act on something that they might have not be vulnerable in. Right. And so how much is a business valuation? What do we need to do to maybe even protect that?
00:14:25
Speaker
Or what does the next stage look like? And I love it, especially the trajectory of principle understanding this because Brian and I used to like, we always say, yeah, we, we can work with businesses or individuals, but like guess who runs businesses? Individuals. And a lot of advisors only focus on the personal side of the individual.
00:14:47
Speaker
But Brian and I have always made a conscious effort to like, well, your business is actually a huge part of your retirement. Now, how are we going to value that? How are we going to use that to its fullest capacity for you to be able to walk away at some point? And how does that affect your retirement?
00:15:03
Speaker
Now we have something where they're all in. No one's ever been able to help them do that. And you guys have kind of done the same thing, right? Is you go in, you figure out the valuation and then you act, help them act on now what, which I think is super powerful through the advisor, by the way. It's not like you guys are trying to sell them anything. It's like, I have to go talk to your advisor. Yeah. I, I like to say that, you know, I have had the luxury of operating in this space for a very long time.
00:15:32
Speaker
And I'm an extension of the advisors that I work with. So, um, when our advisors are working with their clients and then I encourage them, get your CPA, get your attorney involved, because this is a joint effort and the more everybody's on the same page, the better it is. Right. How many times do you think a business owner should get their business evaluated after the first time they do it? Yeah, I think it's an every three year kind of thing.
00:16:03
Speaker
But for unless something big has happened. So I'd call the pandemic something big. When we do the valuation, we look at three years of financial statements or tax returns. And based on what we've seen over the last two years, there's been a lot of up and downs for some businesses, like grocery stores, went crazy.
00:16:33
Speaker
other businesses like restaurants, they had to reinvent themselves. We've been a little bit more a little leeway of looking at things annually. But I've looked at a set of three financials and seen a great big dip and said, hey, what happened? What was it in this year? Well, we were closed because of a flood. So things happen,
00:17:03
Speaker
Maybe you lost a partner, maybe you lost a key employee. Those are good times to say, hey, what is it doing to the value of my business?
Requirements for Business Valuations
00:17:16
Speaker
kind of the PPP money, the IDL money that's floating around. It's like, well, that's all one time stuff. And, you know, how do you pull that out? And, you know, obviously it was, I think the PPP program was actually really great. I know it was abused, you know, you're going to have some of that when you're throwing around that kind of money, but I thought it was actually a pretty effective targeted tool, you know, to help the country. It was interesting. I just went home to Omaha, where I'm from,
00:17:44
Speaker
And you know, I was, you know, that's where I'm from. And so you're kind of like, oh, what about this restaurant or that restaurant? You know, we're trying to find places to eat. And they're like, oh, my parents are like, no, that's closed, gone, gone, gone. You know, like a whole mall just, you know, buried basically in the ground. And so it, yeah, COVID was a massive
00:18:01
Speaker
Impacts, you know, economically. And so what does a business owner, you kind of touched on it, but I just want to highlight it again. What does a, you know, if a business owner is listening to this and say, yeah, I think it's about time I do that. What what are they going to need to have put together? And it's kind of we're, we're filming this or shooting this. It's tax season. So yeah, you kind of alluded to it. What does a business owner need to bring to the table to get this done?
00:18:23
Speaker
I love this question because every business owner is super busy. So it's like, uh, it's intimidating, right? Unless they understand like, Oh wait, that's all it is. So I'm hopeful that this is going to be like, Oh, they just need this, this and that. And every business owner is like, wait, I have that. Like I can do this. So go ahead. Yeah, it is super simple. And so we would just ask them to send you guys three years of financial statements. So that would be your balance sheet and your income statement. And then, um, or,
00:18:51
Speaker
three years of tax returns. And then you have an RFP that you would send to us, but the RFP is super simple. And there's nothing on that information from there that a client would have to open a drawer and find information about it. So it's, you know, how long have you been in business? What's your industry? How many employees? Just simple things that can be answered off the top of your head. So it's not difficult at all.
00:19:21
Speaker
That's good. Let me ask you this. What if a company has a trademark? Does that help their valuation? Or like, how do you know that? I'm saying this because we have one. So does that take into account or it's like, Phillip, stop the madness. Like you. Well, it kind of depends. Is it on your financial statements as goodwill? And so should be $4 million worth. Okay. Exactly. So when, when I have the opportunity to look at financial statements, it, you know,
00:19:51
Speaker
I'm a geek. We'll just establish that upfront. Appreciate that. I love that. And so when I start looking at financial statements, it's like you're opening a brand new book and I'm getting a very numerical look, but I'm trying to get in the heads of the owners and say,
00:20:09
Speaker
Oh, but I see they've done this. So I think they're trying to grow this and I'm looking at wages and I'm thinking this is what's happening. Um, maybe it's a family business and I'm kind of seeing, um, a junior along and I can see it in the, um, 11 25 E that the compensation is being paid. So it's a brand new book and I'm trying to get, um, get into it. And then when I have a chance,
00:20:37
Speaker
to review it with the client, I always start with, you know what, I've had a very numerical look at your company. What I really would like is the color commentary.
00:20:51
Speaker
Right. Maybe something that we didn't see. Here's what I would say. Now this, I'm going to say always, which you never say never always, but here we go. It seems in my experience, every business owner always values their business higher than what it actually is.
Perceptions of Business Worth
00:21:08
Speaker
We all know it. I think we have, we've had one or two that are like, I don't want to put any value on my business at all. You know, yeah, which then, yeah, that's true. So maybe that always, it's a 98, 99% thing. Let's talk about that for a little bit because, because you're going to have, you're going to sit down and I love that commentary of like, I looked at it from the data, you know, and yeah,
00:21:30
Speaker
Have you ever had to be a client, like just be upset? Like, come on, Patty. Oh, gosh. Yes, yes, yes, yes, definitely. And it kind of depends on the purpose of the valuation of why they're doing it. Great point. Because if you think about a family business and you're talking about transitioning from maybe the first generation to the second generation or maybe to the second or third generation, I've actually talked to a business owner who is six generations in. Wow.
00:21:59
Speaker
which takes incredible planning. But you know, sometimes when you're doing that kind of transition, they want the business value to be low because yeah. So, so kind of you, the numbers are what the numbers are sometimes. Yeah. You got to take the emotion out of it. And, um, and, and so you kind of see sometimes this happens, um,
00:22:29
Speaker
if I had a manufacturing company and I valued it and it's a lot lower than they thought it would be, then I asked the question and I said, but what about your building? And they're like, oh, well we've got a separate LLC for that, which is really smart. That's good planning. But it's not included in the financials that I saw. So when they think of the value,
00:23:00
Speaker
It's inclusive of the operations and of the building, and all I had was the operations. Obviously, you're doing this for free. You're an insurance company.
Insuring Business Value and Managing Risk
00:23:14
Speaker
When something's free, you're typically the product. I don't say that in a negative way, but obviously, we insure our house. We insure the things that are valuable to us, our incomes, our kids, our spouses, cars,
00:23:29
Speaker
Obviously, if you have a multimillion dollar business or even a business or sort of, you know, a couple hundred grand, there's value there and it probably needs to be insured. So can you kind of talk at a high level of some of the solutions that maybe come out of this to, you know, risk manage the value of that business? Great question. Yeah, excellent question. And let's kind of break it down into kind of those areas that I said business owners care about.
00:23:57
Speaker
So first, let's talk about when we want to protect the business, there's two things that kind of come out from that. And that is kind of from a business succession and a buy-sell perspective. When if the three of us are in business together, when we have our buy-sell agreement, our buy-sell agreement gives us what the purchase price will be
00:24:23
Speaker
And you know, I'm old, so I'll be the one that dies, you guys. Just graduate. Graduate yourself. It always sounds better. So I die. Then the two of you are based on our buy-sell agreement, are obligated to buy from me. Well, if we've done a real, let's just say for ease, it's a $3 million company. Well, now both of you have to come up with a half million dollars to buy me out. And that's just a very natural way
00:24:53
Speaker
for insurance, life insurance, to be used to generate that income so that it doesn't drag on the business for you to have to buy me out. And so a very close sister to the valuation is a review of the agreement. And I kind of view our purpose in reviewing the agreement is to make sure that the business owner has the right amount of money
00:25:23
Speaker
in the right place at the right time. And so from a buy-sell perspective, there's usually a provision in the buy-sell agreement that says what the purchase price is. And that's where our valuation comes in. So you can compare. I did the valuation. What does it look like in the buy-sell agreement? And would you sell it for that? Right. That's the usual, yeah.
00:25:53
Speaker
I've had a lot of construction companies, especially in the buy-sell agreement, they list the purchase price as book value. Which they never saw that. Right, right. And so I have a lot of conversations about the value of a company having two parts, what you own and what you do with what you own. And so what you own is on your balance sheet.
00:26:23
Speaker
what you do with what you own is in your income statement. And if your valuation is only looking at one of those, it's gonna be undervalued. And so helping people understand that. So that's one of the things that you could use insurance for. Another thing. Well, go ahead. Well, I was just gonna say that we also see in protecting the business, key person insurance. Just if something happens to this,
00:26:52
Speaker
key sales guy, the, um, the operations manager. We want to make sure that you've got some money to go out and find somebody else. Yeah. Who gives the final evaluation, like business evaluation to the business owner? Is it you and your team or is it like us? Let's talk through that. We love it with it to do it as a team. So, um, we prepare it, we send it to the advisor and then, um,
00:27:21
Speaker
the advisor can set up a conference call and we will go through it with, um, with everybody. And I kind of like it that way because, um, there's business valuation is art, not science. And, and I like to tell people, remember when I said this is a numerical look at your company. I also want to tell them some parts of this are math and some parts of this are Patty Bell.
00:27:53
Speaker
And I want to explain to you what parts are Patti Bell. And so that takes kind of the art to it because there's two parts of evaluation that are kind of the art part of it. One is picking multipliers and cap rates. And the other part is excess owner comp.
00:28:22
Speaker
And quite frankly, when I tell somebody that I've included some excess owner comp, most business owners say, wait, what? I don't, I don't get paid any extra. And then I, I help them with, well, as an owner, you get paid two ways. You get paid to do the work and you get paid to be an owner. And when you get paid to do the work,
00:28:51
Speaker
is, and that's what you'd have to pay somebody else to do the work to do the same work. Right. And so if you are, you know, let's just say that's a hundred thousand dollar job, but you're their owner. So you're taking 200 out. I'm going to add back a hundred thousand dollars to that. Um, in that, um, calculation and, and then all of a sudden when you start and when you help them with,
00:29:20
Speaker
uh, excess, anything I include in excess owner comp actually increases the value of the company. Then suddenly I start hearing about, whoa, you know, I do have my college student working and we go to the Bahamas for a conference and, um, I, I want the $80,000 suburban or escalators in the driveway. Here's just a fun story to tell. Cause I,
00:29:50
Speaker
I did a valuation of a grocery store in California and, and I get it, you know, in California, they, they needed to get their groceries fast, but probably they didn't need a Maserati. Probably not. But I'm just saying, yeah. Yeah. What about, Oh, go ahead. So I wanted to just kind of jump. So that was, that's kind of where you would see insurance and on the protecting your business side.
00:30:17
Speaker
On the protecting your employee side, the media is packed with the great resignation. Almost every business owner we're talking to is having difficulty retaining, recruiting, rewarding. Those areas are coming out and there's a number of benefits that can be offered to
00:30:45
Speaker
hit the objectives of the business owner, whether it's a qualified plan, group products, or even something just as specific as a deferred comp plan. Gotcha. And then, of course, that third bucket is just the lifestyle. And so just the normal things like Rick talked about, the income protection part of it, and then survivor income. Those are ways that insurance comes into play.
00:31:15
Speaker
But it might not. Right. Well, and the planning that they maybe did when their business was valued sub one million. And if it goes over a million, you kind of have to start to redo some of that stuff or at least evaluate it because the numbers just get much bigger, much faster when you own a successful company.
00:31:36
Speaker
One of the things I wanted to ask too, just because we're getting more and more of this, we've had several business owners, not like we're helping them, but just running through the numbers in terms of retiring and future income that have sold their business or done an exit.
00:31:53
Speaker
What would this be a good service for somebody who's maybe coming in and buying a business, you know, to get like another set of eyes on evaluation versus like a business broker who obviously, you know, is incentivized to get the business sale done. Um, any, any kind of thoughts or color there? Yeah. You know, um,
00:32:16
Speaker
We work with business brokers, and sometimes when people are looking at our informal valuation and they're comparing it to the valuation the business broker had, ours is lower. And I like to explain to them, you know, they're kind of like a realtor. And, you know, the realtor, when they're going to sell your house, they look around them,
00:32:43
Speaker
about what the peers are doing, and then they're gonna maybe shoot a little high. Business brokers tend to shoot a little high so they have a little room for negotiation. And so that's the perspective that it comes to me as is that, hey, why are you so much different than the business broker? And then one thing maybe that we haven't touched on from a
00:33:12
Speaker
informal business valuation compared to a certified valuation. So there are certain times in life where a certified valuation is required. And by certified valuation, that's one that's completed by an accredited, there's some designations that are valuation focused. And when you get a valuation, a certified valuation, it's
00:33:42
Speaker
defendable. And so if you use it for, so you need it for estate tax purposes, you need it for an ESOP, you need it for gift tax purposes, for those things where you're basing decisions and doing that as.
Certified vs. Informal Valuations
00:33:57
Speaker
So if you want that, then you need a certified valuation. And then the thing that you get with a certified valuation that you don't get with our informal valuation is that
00:34:12
Speaker
A certified valuation does just what the house realtor does. They look for businesses like yours in the same kind of community, in the same, and what did those sell for? We don't do any of that kind of comparison, but that's what you would get with a business broker. That's what you would get with a certified valuation. How much is a certified valuation? Just for fun.
00:34:37
Speaker
Oh, we're in Iowa. So, um, I would probably say somewhere maybe eight to 10,000. Yeah. Okay. Okay. On the coast, on the coast, much higher. Right. So how do our, like, let's say our listeners are leaning in. So how do they interact with Patty Bell and getting their business, uh, informally evaluated?
00:35:04
Speaker
well, they will contact me through you. So. Okay. I just wanted to make sure we're all safe. Yeah. So it's us. So you already have a relationship with us. I think that's the best part. Text us, call us and let's get this started. And honestly, Brian and I would love to go through it just to make sure that like we understand the process and we can be, you know, speak to it even, even more. So I think that would be kind of a fun exercise just to, Hey, here's our three years tax returns. We do have a trademark. Hey,
00:35:34
Speaker
So I think that'd be really good just for our knowledge to understand exactly what and how it was going through. Definitely.
00:35:42
Speaker
Um, so tell me this. So give us a couple, uh, last closing thoughts that you have to our listeners that are just out there, maybe encouraging them or whatever. But, uh, this, your voice is just amazing by the way. And, uh, I love your knowledge of 36 years doing this. Like it's so awesome. And then I have one question after you have your closing thoughts. That's a fun question. So go ahead. Okay. Awesome. So.
00:36:10
Speaker
I love this kind of work. Lots of people ask me, why are you still there after 36 years? Because every day is a brand new story with business owners. It's been amazing to me the amount of money you can make doing really weird things.
Aligning Perceived Business Value with Planning
00:36:32
Speaker
It's been a really great story. We know what your passion is.
00:36:39
Speaker
You've had a good idea. You built a business, a successful business. Now let's take care of it. And, and so, um, just make sure from a valuation perspective that you have kind of those two things match what, what in my head would I sell the business for? And what does my documentation say? Because too often those things are not done at the same time.
00:37:06
Speaker
They're not cohesive. They don't line up to each other. That's great. Okay, here's my question because you kind of alluded to it. What has been the craziest businesses that you had to evaluate? I had a business in the East Coast that they cleaned dirt.
Quirky Business Valuations
00:37:24
Speaker
Yes, yes, they do. They do clean dirt. So that was a good one. I've done a salon where they do the hair of celebrities. So that's kind of fun. The wire bindings that
00:37:50
Speaker
are kind of on the old school recipe books. That was... Oh, interesting. Okay. Yeah. That was a good business. A business that makes lawn ornaments. Brian's favorite. He's the reason why they're in business actually. I got 40 gnomes in my yard. He doesn't really win.
00:38:12
Speaker
Okay. So tell me this, if you were going to start a business from all the knowledge you have, what are you like, this is the business I would do, even though you really don't have a lot of passion for it, but you're just like, this is so quirky. I would do that. Oh gosh. Um, I think it would be travel, um, in the travel is to help people go see the world and, um, make it easy. Yeah. Oh, that's great.
00:38:39
Speaker
That's great. Patty, you are a breath of fresh air. I can't wait to work alongside of you and get some of the Patty Bell isms. I'm sure there are. Uh, but thank you for pouring into business owners over the last 36 years. I don't know if it's 36 years, but ever since you started this career, um, and this job, I think you're doing amazing work and, uh, I'm grateful that you took some time with us and our listeners can hear more about what you do and how you value businesses. So thank you so much for being here.
00:39:06
Speaker
You are so welcome, and thank you so much for having me. I mean, it's really fun work, so I'll probably do a little while longer. Absolutely. So you've been listening to the Uncommon Life Project. I've been your host, Phillip Ramsey. And I'm Brian Dewhurst. Until next time, go be uncommon. Thanks for listening. Thanks, everybody. Bye-bye.
00:39:24
Speaker
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