Caine Nakata

Sweat Equity Evaporates in Business Evaluation

There’s Nothing Fair about the Fair Market Value of Your Business If you’re a business owner, you are acquainted with insomnia, 16-hour workdays and no weekends off. You used credit cards and borrowed from family and friends to keep your boat afloat. And just the time you think you’re on the Titanic, your business has its first profitable month. You’ve shed blood, sweat and tears, and now you want to somehow account for that sweat equity in the appreciable value of your business. It’s a good thought, but think again. The fair market value of your business will set...

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Should the Sale of Your Business Be Your Retirement Plan

Over Valuation Is the Number-One Mistake if Your Business Is Your Retirement Plan It’s not uncommon for a small business owner to view the sale of their business as their retirement plan. They throw all their energies and profits into the business to bolster the valuation, so it’s not unusual they don’t have a 401(k) or IRA. That’s fine, if you can sell your business near its projected valuation. But most small business owners overvalue their sale price and often take less than anticipated. That’s why it’s important to create and maintain a personal retirement plan that isn’t dependent...

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Business Continuation is Contingent on a Plan

Without a Business Succession Plan, Its Continuation is Doomed The successful transfer of a small business is dependent on funding sources and continuation documents to ensure a smooth transition from the present to future owner. The document needs to cover every contingency. Both parties agreeing to a business valuation at a future date may actually be the easiest part of the purchase agreement to draft. The harder scenario is to script the contingencies of death and disability into the buy-sell agreement, especially when family, friends and key employees are involved. When there is no continuation plan or the plan...

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