Business Valuations with Shelia Darby

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In this episode, Shelia Darby, Managing Director of Bizworth, discusses the importance of accurate business valuations in M&A transactions, the different valuation methodologies, challenges in valuations, best practices and ethical considerations, and the value of partnering with valuation professionals.

Resources Discussed in this Episode

• Aswath Damodaran resources on valuation and corporate finance: https://pages.stern.nyu.edu/~adamodar/
• Business Reference Guide: https://businessreferenceguide.com/
• Vertical IQ: https://verticaliq.com/
• Deal Stats: https://www.bvresources.com/products/dealstats
• Biz Comps: https://bizcomps.com/
• ValueSource: https://www.valusource.com/
• Peer Comps: https://peercomps.gvalue.com/
• Pitchbook: https://pitchbook.com/
• Brokerage Simplification Act Info: https://masource.org/resources/legal-updates/

Topic DiscussedStructure and Summary

This episode features an interview with Shelia Darby, Managing Director of Bizworth, who has over 25 years of experience in business valuations. The discussion covers the following key sections:

Introduction and Background

Shelia shares her background, starting in the corporate world at companies like Enron and transitioning to the middle market and Main Street valuations. She discusses her certifications and the importance of continuous learning.

Importance of Accurate Business Valuations

Shelia explains why accurate business valuations are critical for both buyers and sellers in M&A transactions, helping to close more deals and avoid leaving money on the table.

Valuation Methodologies

The three main valuation approaches are discussed: asset approach, market approach, and income approach. Shelia dives into the details of each approach, common methods used, and when to apply them.

Special Circumstances and Challenges

Various special circumstances and challenges in business valuations are explored, including non-operating assets, intangible assets, regulatory impacts, distressed businesses, and rapid growth or volatile businesses.

Best Practices and Ethical Considerations

Shelia shares best practices for valuations, emphasizing transparency, honesty, and using reputable sources. She also discusses ethical considerations, drawing from her experience on the Ethics Oversight Board of NACVA.

About Bizworth

Shelia provides information about her company, Bizworth, and the valuation services they offer to support M&A advisors and business brokers.

Questions/Answers

Throughout the interview, several questions were asked and answered:

Q: How did you get into the business of valuations, and what drew you to it as a career?

A: Shelia started in the corporate world at companies like Enron, working in valuation groups. She transitioned to Main Street and middle market valuations in 2014, finding it more appealing.

Q: Why is an accurate business valuation critical for both the seller and the buyer in the M&A process?

A: Accurate valuations help close more deals, avoid leaving money on the table, and identify gaps early on.

Q: What are the different valuation methodologies, and what should M&A advisors consider when looking at them?

A: The three main approaches are as