#201: The Current and Future State of Business Valuations

Today I’m talking with returning guest and the CEO of Prairie Capital, Dave Deihl. Prairie Capital is one of the leading ESOP, mergers and acquisitions, and business valuations firms in the country. Dave and his firm have eight locations across the country, perform about 400 valuations annually, and are major leaders in the ESOP community.

In this episode, Dave will share his thoughts and opinions on business valuations now and in the near future, what uncertainty can do to an economy and business valuations, and how all of this compares to third-party sale evaluations.

What You Will Learn in Today’s Podcast Interview:

Thoughts Dave on the economy based on 350+ annual valuations
Will COVID-19 be an add back in valuations or not?
The difference between financial valuations vs. strategic valuations
The practice of valuations and ESOPs and what the pandemic has done to it
The major concerns that people are looking at as they’re looking at the ability of a company to borrow
Dave’s thoughts on the current state of uncertainty when forecasting business revenues
When is the lack of consumer spending going to catch up to us?
The building blocks that Dave recommends working on right now to build a healthy business
How uncertainty in our economy, banking, and the American consumer impacts business valuations
The impact of COVID-19 on financing merger & acquisition transactions
What Dave thinks the M&A market will look like in the next six to twelve months
What the word “intentional” mean to Dave

Podcast Summary:

COVID, the nationwide quarantine, social unrest and supply chain issues are easy-to-understand examples of how unknowns directly impact business valuations. So far 2020 has really taught us what truly sustainable, predictable, and transferable cash flow looks like.

My guest today is Dave Diehl, CEO of Prairie Capital – one of the nation’s leading ESOP and M&A firms.

Dave and his firm have 8 locations across the country and perform over 400 business valuations annually, many of which are repeat ESOP valuations.

Dave is the perfect guest to talk on this topic because of his company’s exposure to a huge variety of industries and hundreds of annual valuations. They have a real live look into how COVID is impacting balance sheets and future forecasts.

Dave also shares with me some great insights about how 3rd party strategic buyers, Private Equity Firms and banks who finance transactions are viewing the market and how that is impacting deal structures and valuations.

This is a great episode to help shift your mindset to rebuild or refocus on strategies that will de-risk your future cash flows, grow value and build a business that gives you options down the road.

Check out our Intentional Growth Assessment on our website. Go to ARKONA.IO/Assessment or text 66866 to take a two-minute, twenty question assessment that we’ve created to help you shift your mindset and focus on value-creating activities that will help you get what you want with your business.

Sign Up For The Mastering Your Cash Flow Video Series

We created a video series called Mastering Your Cash Flow that helps you get clear visibility into your cash flow and build a financial strategy that allows you to capitalize on the future opportunities that come from the crisis

What You'll Learn in the Mastering Your Cash Flow Video Series

How to Build a 13-Week Cash Flow Statement: Get clarity on where and how your cash is coming from and being used and then build a plan to manage it wisely. Learn how to build a 13-week cash flow statement from the top CFOs in the marketplace.
How to Build and Revise Your 2020/21 Budget and Forecast: 2020 and 2021 are most likely not going to look like you thought they did back when you built your budget and forecast. Learn how to model out different scenarios using forecasting best practices.
Create a Strategic Plan to Grow Company Value: Increase the chances you come out of the gates and capitalize on future opportunities when our new "normal" sets in. Start thinking about how you can create a strategic plan to grow a valuable business that gives you choices.

About the Guest:

Dave Diehl is the Chief Executive Officer of Prairie Capital Advisors. Dave provides closely-held businesses with a complete understanding of the best available options for their ownership transition needs. He expertly executes projects for mergers and acquisitions (M&A), management buyouts (MBO), Employee Stock Ownership Plans (ESOPs), estate planning and other corporate finance purposes. Dave serves as a trusted advisor to a diverse range of clients nationwide delivering highly strategic consultation. With extensive end-to-end management experience and a focus on his clients’ success, Dave helps ensure an exceptional ownership transition experience. Dave is a CFA Charterholder and is on the board of directors of two companies – a manufacturer of plastic parts and a financial consulting firm. He is also a frequent speaker in forums around the country on topics including ownership transition, valuation, capital management, and business sale. He is also a past chair of the Advisory Committee on Valuation with the ESOP Association.

Quotes:

09:22 – “I will say too though, that one of the greatest difficulties right now is really picking a date because the volatility in the stock market right now has been pretty significant.” – Dave Diehl, on business valuations

22:29 – “When you’re buying equity, you’re buying the future. So what we need to do is look at what the future prospects of the business are.” – Dave Diehl

50:23 – “[For] the entrepreneur who goes and builds a business, you want as many alternatives as you can. Cause there’s aspects of a deal that are purely financial related and there are other aspects of a deal that are related to more emotional issues.” – Dave Diehl

Links and Resources:

Prairie Capital Advisors

Dave Diehl contact page

The COVID-19 Pandemic: Potential M&A Transaction Issues and the Way Forward

Mastering Your Cash Flow Digital Course

ARKONA Boot Camp

Reach out to me if you have

questions about the boot camp!

You can also reach out to me via email at [email protected], on my LinkedIn.