Intentional Growth #201: The Current and Future State of Business Valuations
Today I’m talking with returning guest and the CEO of Prairie Capital, Dave Deihl. Prairie Capital is one of the leading ESOP, mergers and acquisitions, and business valuations firms in the country. Dave and his firm have eight locations across the country, perform about 400 valuations annually, and are major leaders in the ESOP community.
In this episode, Dave will share his thoughts and opinions on business valuations now and in the near future, what uncertainty can do to an economy and business valuations, and how all of this compares to third-party sale evaluations.
What You Will Learn in Today’s Podcast Interview:
- Thoughts Dave on the economy based on 350+ annual valuations
- Will COVID-19 be an add back in valuations or not?
- The difference between financial valuations vs. strategic valuations
- The practice of valuations and ESOPs and what the pandemic has done to it
- The major concerns that people are looking at as they’re looking at the ability of a company to borrow
- Dave’s thoughts on the current state of uncertainty when forecasting business revenues
- When is the lack of consumer spending going to catch up to us?
- The building blocks that Dave recommends working on right now to build a healthy business
- How uncertainty in our economy, banking, and the American consumer impacts business valuations
- The impact of COVID-19 on financing merger & acquisition transactions
- What Dave thinks the M&A market will look like in the next six to twelve months
- What the word “intentional” mean to Dave
Podcast Summary:
My guest today is Dave Diehl, CEO of Prairie Capital – one of the nation’s leading ESOP and M&A firms.
Dave is the perfect guest to talk on this topic because of his company’s exposure to a huge variety of industries and hundreds of annual valuations. They have a real live look into how COVID is impacting balance sheets and future forecasts.
Dave also shares with me some great insights about how 3rd party strategic buyers, Private Equity Firms and banks who finance transactions are viewing the market and how that is impacting deal structures and valuations.
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About the Guest:
Dave Diehl is the Chief Executive Officer of Prairie Capital Advisors. Dave provides closely-held businesses with a complete understanding of the best available options for their ownership transition needs. He expertly executes projects for mergers and acquisitions (M&A), management buyouts (MBO), Employee Stock Ownership Plans (ESOPs), estate planning and other corporate finance purposes. Dave serves as a trusted advisor to a diverse range of clients nationwide delivering highly strategic consultation. With extensive end-to-end management experience and a focus on his clients’ success, Dave helps ensure an exceptional ownership transition experience. Dave is a CFA Charterholder and is on the board of directors of two companies – a manufacturer of plastic parts and a financial consulting firm. He is also a frequent speaker in forums around the country on topics including ownership transition, valuation, capital management, and business sale. He is also a past chair of the Advisory Committee on Valuation with the ESOP Association.
Quotes:
09:22 – “I will say too though, that one of the greatest difficulties right now is really picking a date because the volatility in the stock market right now has been pretty significant.” – Dave Diehl, on business valuations
22:29 – “When you’re buying equity, you’re buying the future. So what we need to do is look at what the future prospects of the business are.” – Dave Diehl
50:23 – “[For] the entrepreneur who goes and builds a business, you want as many alternatives as you can. Cause there’s aspects of a deal that are purely financial related and there are other aspects of a deal that are related to more emotional issues.” – Dave Diehl
Links and Resources:
Dave Diehl contact page
The COVID-19 Pandemic: Potential M&A Transaction Issues and the Way Forward
Mastering Your Cash Flow Digital Course
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You can also reach out to me via email at rtansom@arkona.io, on my LinkedIn.