Date: Thursday, November 7, 2019
10:00am-11:40am PT / 1:00pm-2:40pm ET
Format: A BVR Webinar

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Featuring  (click image for bio)

Michael Sack Elmaleh
Epiphany Communications

About This Program

Hundreds of thousands of small service businesses are operating in the United States. These include accounting, tax, and bookkeeping practices; barbers and hair stylists; chiropractic, primary care, and dental practices; veterinarians; landscapers, house cleaners, and pool servicers. These businesses are small by virtue of being owned by one or a few owners who, in addition to managing the business, provide personal services directly to their clients, patients, or customers. Specialty brokerage firms often mediate equity transfers of these types of businesses by utilizing well-accepted rules of thumb. Traditional asset, market, and income appraisal methodologies have failed to displace this reliance on rules of thumb in valuing these types of business. Michael Elmaleh introduces an alternative appraisal methodology, the fair commission model, which the presenter believes can provide a more useful and economically realistic way to appraise goodwill in these types of businesses. This model avoids the deficiencies in rules of thumb as well as the more traditional formal models.


  • What are small service businesses?
  • What is Goodwill? Competitive advantage and transferrable customer bases.
  • Traditional appraisal approaches to valuing goodwill and their shortcomings:
    • Rules of Thumb
    • Market Methods
    • Asset Methods
    • Income Methods
  • Conceptualizing goodwill value as a fair commission rate
    • Why fairness is important to buyers and sellers of goodwill
    • Seller’s criteria for fairness
    • Buyer’s criteria for fairness
    • How traditional “earn-outs” embed fairness criteria
  • Value depends upon buyer: value should be based on synergistic buyers
  • Value should be based on discretionary earnings to prospective buyer
  • Goodwill value always has an upper bound. Three ways to compute upper bounds:
    • Maximum Competitive Advantage
    • Compete or Buy
    • Differential Compensation
  • Example 1: Dental Practice
  • Example 2: Landscaper
  • Abandoning False Certainty: The Shift to Probabilistic Forecasting
  • Key Forecasting Variables:
    • Transfer rate
    • Attrition rate
    • Discretionary Earnings per Customer per Year
    • Calibrated estimates and computer simulation
  • Components of computer simulation
  • Comprehensive Case Study: Barber Shop
  • Summary

Learning Objectives

  • Identify small service businesses that possess marketable goodwill
  • Examine the shortcomings of traditional appraisal approaches to valuing goodwill
  • Describe the alternative Fair Commission model to appraise goodwill

Single Connection Policy

Admission to this event authorizes one computer and phone connection for one location. These connections may be transferred users and/or locations. Multiple concurrent connections for a single admission registration are not allowed.

Multi-User CPE Policy

Admission to this program includes one CPE certificate for one individual. Any additional listeners requesting CPE must pay a processing fee assessed at the completion of the online CE survey for this course.

CPE Processing Fees may be bypassed by entering a valid, unused CPE Authorization Code (for single event purchasers) or by logging into BVR's website (for subscribers to BVR's Training Series).

CPE Information

Prerequisites: Knowledge of Business Valuation
Program Level: Advanced
Preparation Required: None
Delivery Method: Group Internet-Based
Recommended CPE: 2 Credit Hours (Accounting Technical)

Closed Captioning:

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