#406: The Art and Science of Business Valuations: Insights from Over 1,500 Valuations with Brandon Hall

Sep 11, 2024

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In this episode of Independence by Design™, I sit down with Brandon Hall, an expert who has conducted over 1,500 business valuations across a wide range of industries. We dive deep into the importance of understanding and controlling the value of your business. Brandon shares his journey from a corporate accountant to a trusted advisor in the valuation space, reflecting on the lessons he’s learned from his extensive experience, especially in working with small to medium-sized businesses.

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We break down the three primary valuation methods: income-based valuations (with a focus on cash flow), asset-based valuations (looking at tangible assets), and market-based valuations (comparing similar businesses in the market). I place particular emphasis on cash flow valuations, which are the most actionable and controllable by business owners like you. We discuss why understanding and managing your cash flow is crucial—not just for keeping the lights on but for driving long-term growth, strategic planning, and maximizing the equity value of your business.

By the end of this episode, you'll have a clearer understanding of how to take charge of your business’s valuation, why cash flow is such a critical metric, and how you can use it to make informed decisions that will help you achieve the independence you’re striving for.

Brandon Hall is the founder of BGH Valuation Services, LLC, is a seasoned valuation expert with over 2,000 business valuations under his belt. Based in Saint Michael, MN, Brandon holds a B.S. in Accounting from Saint Cloud State University and has extensive experience from his roles at Polaris Industries and Best Buy Corporate. A Certified Valuation Analyst® and Certified Machinery & Equipment Appraiser, Brandon is dedicated to helping businesses understand and maximize their value.

Chapters:

(00:00) Introduction and Background - Journey from Corporate Accounting to Business Valuation

(06:00) The Importance of SBA Valuations in Business Transactions

(10:45) Understanding Cash Flow Risk in Business Valuations

(17:20) Mapping Out Ten Year Loans, Common Misconceptions About Business Valuations

(21:24) Strategic Considerations for Business Owners: Equity and Cash Flow

(29:13) Real-Life Examples of Business Valuation Challenges

(35:20) The Role of the Government and Banks in SBA Loans

(40:00) Assets and Proactively Managing Your Business’s Value

(47:00) The Cash Conversion Cycle, Market Approach in Strategic Evaluations

(52:00) Owner Involvement and Cash Flow

(1:05:00) Splitting Assets in Divorces

(1:12:00) Investments - Ryan and Brandon

(1:22:00) Final Thoughts and Practical Advice for Business Owners

Ryan Tansom is a seasoned entrepreneur, speaker, and the founder of Independence by Design™, a transformative ownership framework for growth-oriented business owners. After turning around and selling his family business in an eight-figure exit, Ryan spent over a decade dissecting the lessons learned from his journey. His mission is to help other business owners avoid the pitfalls he encountered by providing them with the tools and knowledge to align their business operations with their personal and financial goals.

With a deep understanding of the challenges faced by owner-operators, Ryan developed Independence by Design™ to empower owner-operators to create sustainable cash flow, grow their company’s equity value, and achieve true independence. He has shared his insights on hundreds of stages, including Vistage, EO, and industry associations, and has reached over 500,000 listeners through his podcast.

Ryan is passionate about helping business owners get unstuck from the day-to-day grind and design a business that serves their life, not the other way around.

Resources:

Books: "Profit First" by Mike Michalowicz, "The Great Game of Business" by Jack Stack.

Tools: Business Valuation Certification Programs, SBA Loan Programs.

Brandon Hall LinkedIn https://www.linkedin.com/in/brandon-hall-cva/

BGH Valuation Services https://bghvaluation.com/

Independence by Design™ Owner’s Workshop https://ryantansom.com/independence-by-design-workshop

Independence by Design™ Ownership Coaching: Ryan Tansom’s Ownership Accelerator programs and coaching https://ryantansom.com/coaching

Ryan Tansom Website https://ryantansom.com/

Ryan Tansom LinkedIn https://www.linkedin.com/in/ryantansom/

Ryan Tansom Twitter https://twitter.com/RyanTansom

Ryan Tansom YouTube https://www.youtube.com/@ryantansom

Ryan Tansom 30-Minute Ownership Strategy Call https://calendar.app.google/tsKk7z6ohugDchWq8