Greg Caruso is a JD, CPA and CVA. Each year he does between 75 and 80 business valuations using ValuSource valuation software. One third are for SBA loans, another third for exit planning and the balance is a mix, including gift and estate tax. Now as a respected business valuation expert, Greg has consulted and advised on acquisitions, business planning and exit strategies with countless firms. He is also active in many local trade and professional organizations and for 4 years was the Editor in Chief of NACVA’s “Around the Valuation World” and member of NACVA’s Ethics Oversight Board.
Quality Valuations in Less Time Using Software
While working on his CVA certification at NACVA, Greg was introduced to ValuSource valuation software to do his case study and has never looked back. The software’s speed and agility mean Greg can deliver more high-quality business valuations in less time. A remarkable story, which shows what is possible using the software, is when Greg’s was asked to value 17 Popeyes restaurants.
Valuing 17 Popeyes Restaurants in 7 days
All the restaurants were owned by the same person, but each one of them was a separate legal entity. Each restaurant had its own characteristics in terms of business strength, business risk, leases vs owned property, etc., and the owner did not want them to be valued as a consolidated entity. Because Greg was extremely familiar with the capabilities of the valuation software, he was confident that he could deliver 17 valuation reports in 7 days! Without the software, this would have simply been an impossible task.
After receiving the data for each store, Greg had his assistant input the financial statements into the software. Because the restaurants were similar, Greg could use the same valuation methods, market data and general approach. For each valuation, Greg did however have to do individual addbacks, normalizations, and adjustments including adjusting the multiplier to assure the valuation was considering the subtle differences impacting risk in each location. Using the software, Greg had the process down, so it only took a few hours per valuation to make the individual customizations.
Using the software’s Report Writer, Greg built a standardized Word report template for this project and generated a draft report for each location which he then customized. In the report, he documented all of his assumptions, made necessary adjustments and came to a final conclusion of value. Within 7 days of receiving the data, he was able to deliver 17 high quality, comprehensive and standards-based valuation reports to his client. Greg said it was a crazy amount of work but was really a lot fun too. It was an extraordinarily successful and profitable week for Greg’s valuation business and probably the most valuations every delivered in a week by one valuator and his assistant!
Greg’s Perspective on SBA Loans
For over 25 years, Greg has been working with SBA loans and feels they have brought a level of sanity to the business buy/sell market because prior to SBA loans, down payments percentages and business values were all over the map. Now with SBA loans, consistent underwriting for a proven loan program have brought stability and some level of standardization to small business sales. This is reflected in better sales price data contained in the market data now available to valuators. Greg says valuators still need to pay attention to the fact that when less than 100% of the business purchase price is paid up front, it is hard to know what actually was paid for the business.
Greg’s valuation practice is now about one third valuations for SBA loans and the software helps him deliver valuations at the price point that SBA lenders expect.
Greg’s book “The Art of Business Valuation”
After Greg had many micro and small business clients come to him with over inflated values, in some cases valued at double the market value, he realized there was a need for more education. Greg authored “The Art of Business Valuation: Accurately Valuing a Small Business,” published by Wiley, www.artofbv.com which details Greg’s thinking on the art of business valuation and how to accurately value a small business. While it covers all the methodologies, the real focus is the market method. In Greg’s opinion, a realistic selling price based on this method is the way to ensure a fair price is paid and a price that can get an SBA loan approved. This minimizes risk for both parties and ensures the seller receives as much money as possible at closing.
As Greg embraces working remotely, he spends winters in Steamboat Springs, Colorado, enjoying skiing and summers in East Windsor, New Jersey, enjoying green grass. Greg plans to focus on ESOPs to establish a more recurring revenue stream for his valuation practice.
What Greg Says to Other Valuators about Using Software
Greg thinks more people should be using software to perform valuation and says “I don’t understand why anyone wouldn’t use a system like this. And especially as a newbie, you really need it because a its pre-thought out and step-by-step process walks you through the entire valuation process.”
Greg’s Bio, the Beginning
Greg began his career in operations as a residential home developer in partnership with his brother where he planned to use his training as an attorney and CPA for his role in operations. As successful developers, they were building 70 houses per year, but Greg could not help but feel that the risk of personal loan guarantees made it a bad fit for him. After a stint in sales Greg found himself working as a business broker. This was the perfect fit for Greg, and in 2009 when it was really hard to sell businesses, he got his CVA certification and started doing business valuation on a more fulltime basis. Now, Greg is transitioning again to doing business valuations full time.