In today's business world, it's easy to get caught up in chasing money, status and success. But as believers, we're called to a higher standard of managing our resources in a way that honors God. In this episode, Eric Scovill and Pastor Nathan Rychener continue the conversation and tackle this important topic head-on. Through insightful biblical teaching and practical advice, take their challenge to reexamine your relationship with finances from a place of heart transformation. Find the encouragement to get into God's word, make a plan, and live generously!
Here are some topics from today’s discussion:
Rejecting Jesus through inaction in the face of cultural opposition
Understanding the Sermon on the Mount
Finding humility and motivation in God’s help
A Call for Contrition: Recognizing the lack of brokenness over sin
Tips to help you get started with the Bible
Practical steps to align your finances with God's purposes
Episode Highlights:
[09:57] Finding Motivation and Humility in God's Help
When you earnestly pray and seek God's guidance and assistance, your motivation to follow through on your intentions significantly increases. The essence of being poor in spirit is recognized as humbly approaching God, acknowledging that we possess nothing of merit to impress Him. This understanding shifts the focus from material poverty to a poverty of spirit, emphasizing the importance of relying on God's help in all endeavors.
[14:12] A Call for Contrition: Recognizing the Lack of Brokenness over Sin
In Psalm 119:136, the Psalmist expresses deep sorrow and sheds tears over the disobedience to God's law that he witnesses in the world. His heart is shattered because he understands that sin grieves God. This heartfelt response to sin contrasts with the current state of spirituality, particularly in America, where there seems to be a lack of contrition and brokenness over wrongdoing. This lack of remorse serves as a troubling sign of the spiritual sickness within our society. The Psalmist's example calls us to examine our own hearts and rekindle a genuine sense of sorrow and repentance for our collective transgressions.
[17:40] Tips for Getting Started with the Bible
For those wanting to get started with regular Bible reading, Nathan suggests beginning with short passages like the Sermon on the Mount to avoid getting overwhelmed. Developing a consistent reading plan is also important, whether it's a chapter a day or reading through the whole Bible in a year. Additional resources like the Bible Project videos can help provide context without replacing direct engagement with Scripture. Most importantly, they stress the need to pray and meditate on what is read in order to understand and apply it, not just check reading off a to-do list. With a plan and the Holy Spirit's help, regular Bible study can become a life-changing habit.
[21:17] Practical Steps to Align Your Finances with God's Purposes
Begin your financial journey by examining your heart attitude and embracing the concept of stewardship of God's resources. Gain a comprehensive understanding of biblical teachings on tithing, cheerful giving, and generosity. Develop a generous lifestyle by considering "how much" you can give in each opportunity, rather than questioning whether to give at all. Remember, the importance lies in giving generously, regardless of the amount, as your heart posture matters more than the dollar figure. Stay open to God's guidance in reshaping your financial goals, dreams, and priorities to align with His purposes. Prioritize obedience over personal desires and regularly seek divine guidance through prayer for your spending, saving, investing, and giving, ensuring alignment with God's will.
Dec 7, 2023
38 min
How serious are you about your faith? On the latest episode of “Wealth Well Done”, Eric and Pastor Nathan Rector challenge comfortable Christianity. They discuss the high stakes of judgment day and urge listeners to truly know and obey God, not just check boxes. Nathan emphasizes responding immediately to Holy Spirit conviction. Don't rely only on second hand knowledge - regularly read Scripture yourself. This episode will stir you up and make you reconsider your relationship with Christ.
Here are some topics from today’s discussion:
Rediscovering the fear of the Lord
Fear of the Lord for eternal perspective and finances
Uncovering the true meaning behind the Sermon at the Mount
Repentance and obedience in Christianity
Surrendering all to love God
Episode Highlights:
[04:55] Rediscovering the Fear of the Lord
In the American church, the fear of the Lord has been lost, along with the reverence, humility, and contrition that accompany it. This absence is evident in our lack of recognition of God's holiness, as seen when Isaiah encountered Him in Isaiah 6. Overwhelmed by a sense of his own unworthiness, Isaiah cried out and fell before the Lord. It is this realization that ignites the fear of the Lord within us. This fear is what safeguards us from sin and compromise, guiding us to walk in integrity and wholeheartedness before God. In an age where this fear is desperately needed, let us seek to rediscover it and cultivate a deep reverence for the Lord.
[08:47] Fear of the Lord for Eternal Perspective and Finances
Without the fear of the Lord, all perspective is lost. We find ourselves chasing after temporary and trivial things of this world, losing sight of eternity and what truly matters. The weight and importance of things in God's eyes fade away when we lack the fear of the Lord. Living for eternity becomes impossible without this reverence. Taking this concept to the realm of money, it becomes clear that faithful handling of finances in light of eternity requires the fear of the Lord residing within our hearts. To gain a proper perspective and live with eternal significance, let us cultivate a deep reverence for God in every aspect of our lives.
[16:53] Genuine Repentance: Actions that Reflect True Transformation
In Acts 26, Paul boldly declares his message of repentance and turning to God to King Agrippa. He emphasizes the importance of performing deeds in line with true repentance. While salvation is a free gift based on the grace of Jesus, it requires action when Jesus says, "Follow me." Paul's message resonates as he urges believers to demonstrate their repentance by taking tangible steps towards change. Whether it's breaking free from addictions or rectifying dishonest practices, genuine repentance calls for actions that align with the transformation of the heart.
[23:03] Wholehearted Devotion: Surrendering All to Love God
In emphasizing the first and most important commandment, Jesus instructs us to love the Lord our God with every aspect of our being - heart, soul, mind, and strength. This goes beyond mere sentimentality; it entails wholehearted devotion and complete surrender to God in every area of our lives. It means obeying Him in all aspects - from our relationships to our finances, from our physical well-being to our business endeavors. True love for God leaves no room for half-heartedness or selective obedience; instead, it encompasses a radical surrender, acknowledging that everything we have belongs to Him, and we willingly follow His guidance in all things.
Dec 4, 2023
35 min
Are you allowing fear to control your financial decisions? Well, fear can paralyze us when it comes to our finances and obedience to God's calling. In this episode of “Wealth Well Done”, Eric Scovill dives deep into the common fears that hold us back, such as running out of money and fear of failure or rejection. Discover how to recognize and overcome these fears by applying biblical principles and letting faith conquer fear. Don't let fear hinder your financial stewardship and God-given calling.
Here are some topics from today’s discussion:
Biblical examples of bravery
Identifying the different kinds of fear
The herd mentality
Overcoming fear with faith
Episode Highlights:
[09:24] Identifying the Different Kinds of Fears
Fear of running out of money - Eric notes this fear can ruin marriages if it causes spouses to argue over finances or hold back from proper stewardship. It can also hinder obedience to God if it keeps someone from fully tithing or supporting causes they feel called to.
Fear of failing - Letting this fear prevent someone from trying new things, taking risks in business or ministry, asking someone out, etc can go against God's plans to stretch and grow them. It keeps people on the sidelines rather than in the arena.
Fear of losing - Related to investing and business ventures, this fear makes people overly cautious and plays "proven defense" too early rather than having faith in calculated risks. It changes one's mentality from victory to simply not losing.
Fear of standing out - The pressure to conform to peers and fit in socially rather than stand up for one's faith. Eric notes this was an issue even in Christian school where faith wasn't considered cool.
Fear of being overly Christian - Ridicule from friends for no longer acting as they do and separating oneself more due to faith convictions on actions/behaviors.
Fear of taking a stand - Reluctance to boldly take an unpopular position in faith like David did against Goliath due to fear of backlash or consequences.
Fear of rejection - A profound fear Jesus knew well but others face today, especially with social media amplifying opportunities for rejection.
[10:49] Overcoming the Fear of Losing
In sports, in order for a team to gain an early lead, they may prematurely shift to "proven defense" out of fear, ultimately changing their entire mindset. Relating this to investing and decision making, Eric emphasizes how some people's fear of losing prevents them from taking risks or even trying in the first place. Instead, don’t let the fear of losing hinder opportunities that God may want to bring into your life through obedience and courageous action, as this fear can impede the plans and calling God has for you.
[23:39] The Herd Mentality
During Jesus' beating and mockery, an estimated 150-200 or possibly up to 600 Roman soldiers participated, despite some having knowledge of his teachings and miracles. Eric highlights the parallel with religious leaders like the Pharisees who, influenced by the herd mentality, failed to stand against the crowd, though their hearts had hardened against Jesus. Only a few, like Nicodemus and Joseph of Arimathea, displayed courage by defending Jesus even when it was unpopular. Eric encourages us to resist the herd mentality, prioritize what is right in God's eyes, and uphold personal conviction and courage to avoid being swayed by crowd behavior.
[29:02] Overcoming Fear with Faith
When we embrace the challenges of doing what God asks us to do, we often overlook the true magnitude of the monumental achievements and underdog stories in the Bible. It's crucial to comprehend the context of being like an isolated individual surrounded by an army seeking to harm you, yet rising up with unwavering faith and boldly declaring, "No, look at what's beyond them, the presence of angels." Discovering how to let our faith triumph over fear is truly life-giving.
Nov 23, 2023
34 min
Are you faithfully stewarding the gifts and opportunities God has given you? In this week's episode, Eric delves into the Parable of the Talents found in Matthew 25. This parable teaches important lessons about stewardship, accountability, and faithfully using the gifts God has given us.
In the parable, two servants doubled their talents through wise investment and were praised – but the servant who buried his talent out of fear was severely rebuked. God expects us to develop the abilities He's provided, and not let fear hold us back from His calling.
New perspectives on an often-misunderstood parable await. If you want an encouraging challenge to better steward your God-given talents, listen to this episode! Share with a friend who needs to hear they don't have to live in fear.
Here are some topics from today’s discussion:
Seeing ourselves as stewards, not owners
Making the most of our abilities, no matter how small
Stepping out in faith instead of living in fear
Accountability for gifts and opportunities
Episode Highlights:
[09:05] God's Ownership, Our Stewardship
Everything we possess, including our time, talents, treasures, body, reputation, resources, and relationships, are not truly ours but belong to God. We are merely the stewards, entrusted with these gifts. While it may seem like our hard work brought us these things, it is God who ultimately granted us the ability to earn them. Recognizing this fact shifts our perspective entirely. When we view everything through the lens of stewardship, it alters how we perceive and handle everything around us. The biblical concept of stewardship is a constant theme, reminding us that we are accountable for utilizing God's gifts responsibly and effectively.
[17:31] Making the Most of Our Abilities, No Matter How Small
Eric discusses the expectation of God for us to maximize the abilities and resources bestowed upon us, regardless of their perceived size. He highlights the parable where the master commends the servant on his faithfulness over a few talents. Eric underscores that in the grand scheme of God's creation, what we consider vast could still be minute. The essential takeaway is that being faithful with small things paves the way for increased responsibilities. We ought to cultivate the gifts and opportunities God has provided without drawing comparisons but instead, using our abilities for His divine intentions.
[27:17] Stepping Out in Faith Instead of Living in Fear
Eric highlights the parable of the servant who hid his talent out of fear, emphasizing that "fear of failure is no reason for inaction." He cites scriptures like Exodus 20:20, encouraging us not to be afraid as God's tests are meant to strengthen us. Eric urges his audience to act courageously and pursue any ambitious goal that God may have instilled in their hearts, despite any fears they might harbor. He asserts that living in fear is incongruous when God encourages us to take risks for His kingdom. The parable serves as a lesson that God values faith and action over fear-induced stagnation, reinforcing that we should not let fear hinder us from fulfilling our divine purpose.
Resources Mentioned:
www.stewardshipresources.com
Nov 9, 2023
33 min
Did you know that the official inflation rates may not be telling the whole story? In this episode, Eric Scovill dives into the hidden aspects of inflation, risks of high national debt, and implications of the U.S. losing its top reserve currency status.
Eric sounds the alarm on potential economic storm clouds on the horizon and provides strategies for weather-proofing your portfolio. Learn strategies for navigating this period of uncertainty and discover why diversifying with real assets could be a game-changer for your investment strategy.
Here are some topics from today’s discussion:
Why inflation numbers are misleading
High national debt poses risks
Stock market may be overvalued
Dollar's world reserve status at risk
Diversify with real assets like real estate, commodities, treasuries, gold
Episode Highlights:
[07:12] Inflation, Its Measurement, and Potential Causes of Hyperinflation
Eric argues that the Federal Reserve's reported inflation rate of 3.7% might be misleading due to rising rent costs and political incentives to downplay inflation. Eric warns of hyperinflation risks and economic instability when money supply grows over 50% per month, and highlights the challenges posed by the soaring U.S. national debt exceeding $33 trillion. Citing historical resilience of the stock market, Eric advises listeners to ignore market swings, diversify their portfolios, and hold onto their investments, given the average post-recession growth of 164%.
[16:06] The Devaluation of the US Dollar: A Shift in Global Oil Trade and Excessive Spending
A key reason behind other countries holding large reserves of US dollars is to purchase oil. However, major oil producers and consumers are now considering conducting trades outside of the US dollar, leading to a decrease in demand for the currency and causing its devaluation due to excess supply. This is not offset by the US withdrawing money from circulation, as its spending continues to escalate. With a federal deficit of $1.7 trillion, federal spending at $6 trillion and tax revenues at $4 trillion, the US is injecting more money into the system than it's taking out, exacerbating the situation as other countries use fewer US dollars.
[19:01] Investment Strategies and Market Valuation
Eric points out that the stock market appears to be overvalued by an average of 114% based on various metrics. He underscores the importance of accurate asset valuation behind investments, warning that market hyperinflation can lead to portfolio overvaluation. Discussing alternative investment options, Eric draws attention to real estate, commodities such as oil, and US Treasuries as potential hedges against a declining US dollar. He particularly stresses buying real estate at a good price, echoing Isaac Bennett's advice that "basis is forever," and highlighting its effectiveness as a hedge against currency devaluation.
[21:23] Potential Portfolio Hedges
US Treasury bonds/bills: As discussed, these provide exposure to safe government debt with various maturity dates. They can help balance risk.
Gold: Considered a store of value for millennia and less correlated to stocks/bonds. Physical gold or gold mining stocks.
Other precious metals: Like silver, which has industrial uses but also seen as precious metal hedge.
Commodities like oil: Demand remains for necessities even in downturns. Oil seen as particularly important commodity.
Real estate: Tangible asset class not correlated to stocks. Residential or commercial property or REITs.
ETFs: Provide diversified, low-cost access to assets like Treasuries, commodities, gold which some may not want direct exposure to.
Military/defense stocks: Potential beneficiaries if geopolitical tensions rise and countries increase defense spending.
Foreign stocks: Geographic diversification outside US markets which may be impacted by dollar devaluation or economic issues.
Nov 6, 2023
33 min
Join us this week as we revisit a thought-provoking episode where Eric Scovill engages in a conversation with Jeff Miller about the profound impact of money on marriages. Jeff Miller, a highly experienced licensed therapist with close to three decades of practice, is the co-owner of Glen Manor Counseling and serves as the chairman of the elder board at Northwoods Community Church. Whether you're hearing this for the first or second time, tune in as Jeff sheds light on the significance of money within the context of marriage.
Here are some topics from today’s discussion:
Understanding the different needs in a relationship and the role of money
The flawed mentality of tying success to a perfect life
Recognizing true worth in relationships
The importance of setting up ground rules for conflict
Financial union in marriage
How money can impact intimacy
Episode Highlights:
[07:33] The Flawed Mentality of Tying Success to a Perfect Life and Recognizing True Worth in Relationships
Many men tie their sense of success to their wife's happiness and having the appearance of a perfect life. However, this mentality is flawed because it does not address the underlying issues that occur behind closed doors. The goal should be to work on the root issues instead of merely painting a facade of a perfect life. Men are often taught that their worth lies in what they do, rather than who they are. This leads to them walling off their hearts, numbing their emotions, and ultimately damaging their relationships. To break free from this mindset and realize their true worth, men need to recognize that their role as a provider, protector, or caregiver goes beyond just earning money. It takes intentional effort to reflect, evaluate, and communicate with vulnerability and openness.
[23:57] The Importance of Setting Up Ground Rules for Conflict
Setting up ground rules for conflict is crucial in any relationship. It affirms the value of the relationship and sends a message that it matters. By establishing ground rules, we are essentially saying that we are not going away and that we value the other person. Ground rules provide safety and security, which everyone needs in a relationship. Without ground rules, there is no safety, and this can lead to fear of rejection and abandonment. Ground rules don't have to be elaborate, just two or three points can be enough.
[26:24] Financial Union in Marriage
According to the biblical context of marriage, two individuals become one when they leave their families and cleave to each other. This oneness entails sexual and intimate connection, but also financial union. Keeping money separately may lead to power struggles and control issues within the marriage. Trusting each other with finances and working together as a union is crucial in building a healthy and successful relationship. A woman will have no problem submitting to a man who is in submission to the Holy Spirit and to her. However, if she sees him making selfish decisions that do not consider the best interest of their family, it becomes harder for her to submit. Women typically operate from an emotional framework and fear being hurt or left behind, making money a significant representation of trust and security in a relationship.
[28:59] How Mony Can Impact Intimacy
Money can have a significant impact on intimacy within a marriage. It can reveal power dynamics, communication issues, and emotional needs. Different views on money due to family backgrounds require open communication and compromise. Unhealthy money behaviors can lead to a lack of emotional and physical intimacy because keeping finances separate can indicate a lack of trust and unity. Focusing on careers can also detract from emotional intimacy and place too much value on external measures like income.
Resources:
Glen Manor Counseling
Oct 26, 2023
38 min
Ready to go international? This is Part Two of Eric’s interview with Isaac Bennett, Mike Gudat, and Brad Stegall about a real estate development they're doing in Belize. Discover why they chose Belize as their investment destination, the risks and rewards involved, and get an exclusive look into the specific project they're building. Plus, gain valuable insights into international investing and their strategies for mitigating risks.
Here are some topics from today’s discussion:
Real estate investing and negotiation strategies
Real estate investing network and its benefits
Starting a property management company for control and better customer service
Belize real estate development with a focus on Mahogany Bay
Risk management and the potential for residency in Belize
Episode Highlights:
[03:31] The Art of Negotiation: Listening, Understanding, and Crafting Win-Win Deals
When it comes to negotiations, the number one rule is to listen and understand what truly matters to the other party. While it may be tempting to make a lowball offer, creating a split opportunity requires us to dig deeper. To truly create a deal that benefits both parties, it is crucial to comprehend their critical needs and concerns. By carefully crafting an agreement that aligns with their interests, we can forge a path toward mutual success. The process entails listening attentively, crafting the right solution, explaining our rationale, and then moving forward. While there may be instances where bold offers are made, they often stem from thoughtful consideration of the market and the other party's priorities.
[12:27] Strategic Advantages of Investing in Mahogany Bay, Belize
Mahogany Bay in Belize offers strategic advantages as a prime investment location, evident from the Hilton's choice to establish itself there first. With waterfront access, boat slips, private beaches, and pools, the development provides an exceptional setting. What sets Mahogany Bay apart is that each parcel is individually deeded as an IBC (International Business Company), simplifying property transactions by trading business shares instead of real estate. This structure allows investors to avoid Belize's 8% transfer tax, resulting in significant savings. Designed to maintain a well-managed homeowners association (HOA) and allow creative architectural freedom, Mahogany Bay presents a remarkable opportunity for investors looking for financial benefits and a beautiful environment.
[21:07] Real Estate Investing in Belize: Risks and Rewards
Weather-related risks, particularly hurricanes, pose a concern for real estate investors in Belize. However, the presence of a barrier reef offers protection against storm surges, and all-perils insurance is available to mitigate potential damages. Another challenge for investors is the lack of traditional financing options due to Belize's "reverse fractional banking" system, which requires cash payments. Additionally, as with any foreign investment, there is a possibility of political or economic instability. Despite these risks, investing in Belize offers enticing rewards. The ongoing development of tourism infrastructure, including hotels and hospitals, provides ample appreciation potential for properties. Moreover, Belize offers expatriate tax havens and favorable tax benefits, making it an attractive choice for foreign investors. Investing early in growing markets like Ambergris Caye allows investors to capitalize on future growth, similar to early investments made in Florida. Notably, Belize boasts strong property rights protections, with contracts and laws conducted in English, providing a sense of security. Furthermore, the high-end development at Mahogany Bay offers established amenities, reducing risks compared to other areas in Belize.
Resources:
www.storehouseassets.com
BiggerPockets
Oct 16, 2023
32 min
In this episode of the Wealth Well Done podcast, Eric interviews real estate investors Brad Stegall, Isaac Bennett, and Mike Gudat about their experiences and lessons learned over decades of investing. They discuss when is the right time to scale beyond a single-family or multi-family property, managing risk through proper financing and cash reserves, and positioning for changing market conditions. They also give a sneak peek into the real estate development project they are undertaking together on the island of Ambergris Caye off the coast of Belize, including investment opportunities available – and gain practical investment wisdom and insights into this international project.
Here are some topics from today’s discussion:
The right time to scale
The right time to go into commercial property
The importance of financial preparedness
Invest in Belize
Episode Highlights:
[02:52] When Is The Right Time to Scale?
To successfully scale real estate investments beyond a single-family or small multi-family property, several factors need to be considered.
Ensure that your personal finances and current business/properties are stable and running smoothly before expanding. Address any existing issues to avoid chaos down the line.
Have proper systems in place to handle the increased volume that comes with larger properties, such as dealing with more tenant inquiries and issues.
Assess your level of experience and expertise and feel comfortable taking on more complexity. Scaling up prematurely can lead to feeling overwhelmed.
Trust your partner's instincts if they believe it is the right time to sell an asset and use the proceeds to strategically expand your portfolio.
Have robust property management support when venturing into commercial real estate, which requires expertise in leases, tenants, and other areas that individuals may lack.
[04:46] When is the Right Time to Go Into Commercial Property
Investors can successfully transition from multifamily to commercial real estate with proper property management and expertise.
Mike advises dentists and other professionals to consider owning their own commercial space to maximize return on investment. He recommends working with proper resources and team members to lease up the property and structure contracts.
[12:07] Financial Preparedness
It is crucial to have a properly aligned balance sheet that matches the level of risk you have taken. Whether you own a duplex and need to repair a $10,000 roof with only $2,000 in the bank or have $100 million in real estate and face a major catastrophe with only $10 in the bank, having the financial capacity to weather any storms is a critical factor that separates those who are prepared for the future and those who are not.
Resources:
www.storehouseassets.com
Oct 9, 2023
28 min
Are you an entrepreneur considering an exit from your small business? In this episode, host Eric Scovill is joined by Joe Van Voorhis of Generational Equity to provide a step-by-step guide on navigating a business sale. From establishing fair market value to negotiating the optimal deal terms, Joe draws on his extensive M&A experience to offer best practices. Don't wait until the last minute - start planning your exit strategy now!
Here are some topics from today’s discussion:
The importance of multiple buyers in selling your business
Evaluating and enhancing business value for potential buyers
What buyers are looking for
The concept of owner dependence
The different types of payouts
Tax implications to selling your business and the importance of financial planning
Identifying your real worth
How to know if your CPA is up to par
Episode Highlights:
[04:21] The Importance of Multiple Buyers in Selling Your Business
As a business owner, you've likely received inquiries from potential buyers or marketing companies interested in your business. It's important to be cautious, especially if they are not actual business owners but rather seeking warm leads. These individuals may aim to source a deal and purchase your business at a lower price. Limiting yourself to just one buyer reduces the market pressures that can increase the value of your business. Instead, start with a larger pool of potential buyers, narrow it down to 15-20 strong contenders, and create competition and leverage. This strategy puts pressure on buyers to make better offers, maximizing your business's value. Having only one buyer severely limits your bargaining power, potentially reducing the value by up to 50%.
[13:15] Evaluating and Enhancing Business Value for Potential Buyers
Generational Equity conducts an in-depth pre due diligence process to measure the company across quantitative and qualitative metrics. They compare the business to industry benchmarks on over 30 data points like financial ratios, operational KPIs, growth metrics, and more. This identifies areas where the business is below average from what buyers expect to see. They then work with the seller to create a "roadmap to enhancing value" over the next few months. They set targets for improving weaker data points to a more desirable level by the time of sale. Examples include reducing owner dependence, improving debt-to-equity ratios, and demonstrating growth potential.
Achieving these enhanced metrics assures buyers the business meets their standards and qualifies their offer. It also gives sellers more negotiating power. By properly evaluating the business value proposition and taking steps to strengthen it, sellers can maximize the price they receive from strategic buyers.
[16:36] What Buyers Look For
Diversification. Buyers want to see how a target business can help diversify or expand their existing operations. For example, acquiring a company with complementary product lines or a stronger geographic footprint. This reduces risk.
Management team. Buyers need to know the existing management team will remain post-acquisition to ensure a smooth transition. Low owner-dependence is also important. This refers to how reliant a business is on its owner's involvement and expertise. Buyers view high owner dependence as a risk factor that can negatively impact business value. Buyers want to see systems, procedures,, and redundancies in place so the business is not solely dependent on the owner working long hours. If the owner is highly involved in day-to-day operations and administration, it shows a lack of scalability.
Resources:
Generational Equity
Oct 2, 2023
43 min
Learn the insider secrets to selling your business for top dollar! In this episode, Eric interviews Joe Van Voorhis of Generational Equity to discuss mergers and acquisitions. Joe shares his expertise from over 35 years in the industry, including 18 years at Generational Equity. He explains the M&A process, how to properly value a business including intangible assets, recasting financials, and who the typical buyers are. Joe also discusses the current seller's market and dry powder that private equity firms have to deploy. If you’re a business owner thinking of selling your company, then this episode is for you!
Here are some topics from today’s discussion:
Mergers and acquisitions defined
Generational Equity’s focus on small and mid-market deals
More about Generational Equity
How to determine the value of your business
How to assess your intangible assets
The traditional buyers
The concept of recasting
What does dry powder mean?
Episode Highlights:
[03:12] What Does the Term ‘Mergers and Acquisitions’ Mean?
Mergers have become a rarity in today's business landscape. Instead, it's largely acquisitions where larger companies absorb smaller ones. At Generational Equity, they specialize in assisting clients who are looking to transition from their current business to pursue new career paths or retirement. Their role revolves around helping them strategically structure their companies to attract potential buyers, ensuring they are market-ready. Furthermore, they facilitate the seamless transaction of selling their business to a qualified third party.
[09:25] How to Determine the Value of Your Business
Buyers typically assume control of the transaction process. They enter the scene, employing tactics to shape and evaluate the worth of a business based on industry standards. Often, individuals rely on the averages provided by trade organizations, as buyers possess in-depth knowledge of valuations from their professional experiences. However, to truly determine fair market value, active participation in the marketplace is crucial. A large pool of potential buyers fosters competitive dynamics and defines the value. Nevertheless, preparing a business for market readiness can be a time-consuming endeavor, usually taking around 6 to 8 months. Once in the market, the number of potential buyers can exceed expectations, greatly increasing the chances of finding the right buyer at the right price. Savvy buyers, just like sellers, begin negotiations with conservative offers and only raise them when outperformed by market forces. This competitive market approach is strongly encouraged to maximize outcomes for our clients.
[16:59] The Traditional Buyers
Strategic buyers (companies looking to acquire competitors or expand into new markets)
Private equity firms and family offices
EB-5 visa investors (foreign nationals looking to acquire a US business to get a green card)
Foreign buyers (both public and private companies)
Joe emphasizes that they want to cast a wide net and access buyers from multiple categories, not just local competitors. Their database has over 34,000 qualified professional buyers.
[20:54] What is Recasting?
Recasting refers to adjusting a business's financial statements to more accurately reflect its true profitability and value. Joe explains that many business owners will underreport profits on their tax returns by taking excess salary, rent payments, or distributions to family members to reduce taxable income. In the M&A process, recasting adds back expenses that were really ways to take profits out of the business, like excess salary or one-time capital expenditures. This "steps up" the reported net profits to a more accurate level that better represents the earning potential a buyer can realize. Recasting typically increases reported profits by around 30% according to Joe.
Resources:
Generational Equity
DealForce app
Sep 25, 2023
36 min
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