Using National Databases to figure the Comparable Compensation

Hello this is Troy Patton of Patton Valuations and I want to congratulate you again on joining our “business valuation network”.

Last time I mentioned that if you had someone who needs a business valuation now or you ever need to start one, you just need to call me toll-free with the answers to these 3 questions and I'll explain HOW and WHAT you should charge your client for the valuation, based on your answers.

The questions were:

 1) What is the INDUSTRY the company’s business is in?

 2) WHY is the valuation needed?

 3) What is the SIZE of the company, specifically size in revenue dollars?

That’s it. Those are the 3 questions I need answers to, to get you started. And the toll-free number to call me at is 800-800-1776 x52.

Or you can always email me at: tpatton@pattonvaluations.com

I also said I would teach you the important items you need to know to get comfortable discussing business valuations with clients.

So today I want to tell you that our Business Valuation process uses NATIONAL DATABASES to figure the COMPARABLE COMPENSATION for your business valuation engagements, and why this is important to your clients.

Let’s use the situation where one of your business Clients is Getting a Divorce.  Any time a client gets a divorce AND owns a business, a valuation usually needs to be prepared to split the marital assets.

Often times, the owner of the business takes a salary that is not the equivalent of what the IRS would deem acceptable or what is known as "comparable compensation."

For example in a recent case I was called as an expert witness for a couple getting a divorce. The owner's revenues were $300,000 in a service business. The owner paid themselves only $30,000 and the profits were $80,000.

The spouse said the business was worth 4 times the profits = $320,000. On closer look, the Owner's comparable compensation in national databases should be $80,000 and profits only $30,000.

This means the business at 4 times profits is $120,000, not $320,000. As you can see, the 50/50 split makes a large difference just on the simple concept of comparable compensation.

So again, we use national databases to figure the comparable compensation for your business valuation engagements. Next time I’ll talk about valuation methods.

If you want to listen to this information in audio, just click on the link and it will take you back to the audio postcard.  Congratulations again for joining our Business Valuation network. This is Troy Patton and I’ll talk with you soon.

How To Start Your Business Valuation Process:

Our process consists of only a few steps to start a valuation for your client:

1. You contact us to find our how much to charge for the valuation. Let us know the industry, why the valuation is needed, and the size of the company.

2. We will prepare and send an engagement letter to your client from our firm which they will sign and send back to us with payment in advance.  This takes the risk and conflict of interest out of your hands and off your E&O Insurance.  (This is how 98% of our valuations are prepared. The others we prepare are for firms who want their name on the valuation.)

3. Complete the input forms for the valuation (we will provide them to you) and then you email them back to us.

4. We will complete the valuation and email a copy of it to you for review before we issue the report to the client.

5. You get paid.  It's that simple.

Patton Business Valuations becomes your outsourced partner for business valuations where we prepare the valuation, deliver it to you to present to your client (or deliver it directly to your client if you prefer) and you make nearly $800 to $1,200 for a few hours of work.

Our standard pricing is just $2400 for a Divorce valuation, $3000 for Buy/Sell and $3600 for an Estate valuation.  For any other type, just email me at tpatton@pattonvaluations.com or call me toll-free at 800-800-1776.

Call our offices at 800-800-1776 if you have any questions or if you have another client in need of a Business Valuation.