By Gregory R. Caruso, JD, CPA, CVA
Here are some recent valuations, which have sometimes been complicated by COVID-19. We recently analyzed a gym, a landscaping company, and physical therapy and chiropractor practices. We do small business valuations for SBA loans, exit and succession planning, and business mergers.
SBA Business Valuation of Fitness Center / Gym / Martial Arts Studio
The team at Harvest Business, LLC, and valuation analyst Gregory Caruso prepared an Opinion of Value for a bank and the SBA, for a fitness center, gym, and martial arts studio that was positioned in the high end of the discount gym industry. The gym was located on somewhat side roads near a major mall with signage and visibility from a major highway. The facility had been well maintained and the equipment was reasonably modern.
COVID-19 has been a problem for the gym and fitness industry. In this case, they experienced a dip in 2020 as the facility was closed for about two months. The number of members had dropped during 2020, but the very large membership was rebounding. A new martial arts director was onboard and increasing ancillary income from classes. Monthly data showed that the gym was recovering quickly therefore only a small reduction in value (compared to a possible 2019 value) occurred due to COVID.
A high value compared to the business valuation market data comparison set was warranted and found for this SBA Opinion of Value Business Valuation.
Landscaping Business Valuation for Exit Planning & Succession Planning
This was a specialty landscaping business that provides new installs of landscaping, mainly for home builders and developers. The company also provides sediment control and related services. The company has many inter-company charges with two related companies. Those inter-company charges were often made based on which company had the ability to pay the bills as opposed to true cost. Therefore, the inter-company charges had to be unwound in order to determine true future cash flow for business valuation purposes of the company.
In addition, the entrepreneurial owner had many other related investments that had to be sorted out and adjusted or removed as they are not part of a future continuing cash flow.
The company has had several very nice growth years increasing business value. However, it mainly serves a cyclical industry. Therefore, values tend to be moderated (as compared to pure reoccurring income type service industries) as is the case with most new construction oriented companies.
Chiropractor, Physical Therapy, Other Medical Therapy Business Valuations for Family and Management Buy Outs
We have had a bunch of these recently. Between the retirement of baby-boomers and upheavals in medical related fields, there has been a lot of interest in business valuations for transition in medical related industries.
While each of these was unique, we saw many of the same complicating factors. They had issues relating to billings vs. collections, and payers and payment reimbursement rates received is very important to these businesses. Another area of concern is the utilization of therapists and physical space used due to lower margins or mark-ups over therapists employment or contract rates that some other medical specialties.
Do you have a business valuation question or perhaps need a business valuation?
Send us a request today. We will get right back to you.