An old saying goes like this: “There are three kinds of lies: lies, damned lies, and statistics.” From the business stakeholder perspective, there is an even worse fourth category—accounting and financial evaluation. On the other hand, enhancing organizational transparency is key to improving your relationship with stakeholders, whether they be employees, family members, investors, or partners. In this article, we’ll explain how Sofer Advisors can help you win over even those stakeholders who may be suspicious of anything financially-related.
Returning to the above phrase calling statistics into question, it was popularized by Mark Twain in his autobiographical Chapters from My Autobiography. Here he attributed it to British Prime Minister Benjamin Disraeli. The fact that a 19th century politician and one of America’s greatest writers were both talking about math and data being used for fraud and manipulation shows that as much as technology has changed, some things still remain the same. In fact, recent history is chock full of examples demonstrating how stakeholders’ suspicion concerning technical aspects of accounting like business valuation services is completely justified.
You don’t have to have lived through the Enron scandal to know the incredible danger of fraud or even accounting mistakes to not only one business, but the entire American economy. A law passed in the wake of Enron’s meltdown, the Sarbanes-Oxley Act, was specifically designed to enhance transparency in business. Yet 20 years after its passing, business transparency remains dismal in many cases. (Does the collapse of FTX ring a bell?)
Putting aside high-profile accounting failures of the past few years, it’s increasingly clear that stakeholder confidence remains on shaky ground. The question every business owner should therefore ask is, “How can I improve the situation?” The answer is to partner with experts who embrace transparency and have the right credentials and experience to build trust with stakeholders—no matter how skeptical they are at the outset.
Thankfully, the expert team at Sofer Advisors creates business valuations that stakeholders can trust in three critical ways:
1) The Credentials to Back Our Work Up
CPAs, CFPs and non-specialists just do not have the special training and certifications needed to do your business justice. If you are considering working with someone who does company valuations on a part-time basis, please stop to think if you’d take the same approach with your health. Would you want a general practitioner (The CPAs of the medical world) to perform a complicated heart surgery on a loved one? No. You wouldn’t even want a general surgeon to perform the operation. Instead, you’d most likely seek out the best cardiac surgeon available.
Your company’s stakeholders expect the same level of dedication, especially when they are concerned about trustworthiness. Rest assured; the credentials held by the Sofer Advisors team are issued by organizations like the AICPA and the Appraisal Foundation that zealously protect their reputations—which translates to your stakeholders as strong evidence you are indeed playing fair in your valuation work.
2) Defensibility
The worst thing a business owner can do if they are interested in organizational transparency is to present stakeholders with a black box valuation—one that offers a valuation figure… and not much else. Sofer Advisors provides the opposite approach. Your stakeholders will understand what factors drove the valuation, how we reached our conclusions and all of the supporting computations behind it.
Even so, we sometimes have business owners and their stakeholders argue, “There is no way this company is worth so little (or so much)” only to see the light when we dig into the numbers with them. And in cases where our assumptions could be more accurate, we revise them—creating further trust and transparency in our work.
3) Going Beyond Mere Numbers
Stakeholders possess varying levels of financial literacy. A valuation that is strictly numbers-based in its presentation might as well be written in ancient Greek to someone not used to working with financial data. That’s why Sofer Advisors goes well beyond the numbers to provide insights into your valuation.
For example, when the Sofer team drills down in a valuation to demonstrate the impact that poor IT security has on a company by hurting the value of a particular business unit, it’s illuminating for a stakeholder lacking financial experience—as opposed to presenting merely a financial value they’re predisposed to believe is inaccurate.
The key to building trust and strengthening stakeholder confidence in your business is to embrace transparency in the most important area of your organization—your company valuation. Sofer Advisors has the credentials, the skills, and the ability to effectively communicate our findings to all sorts of people, including those who don’t deal with numbers every day. Contact Sofer Advisors today for your free consultation to learn how a valuation—completed the right way—can bring every stakeholder together in a positive way.
David Hern is the founder and chief executive officer of Sofer Advisors, LLC focusing on business advisory services related to litigation assistance, estate and tax planning, and business enterprise valuations for various privately-held and public companies. He is a qualified financial analyst with a proven ability to simply and clearly communicate analysis to boards of directors, presidents and CEOs, CFOs, controllers and private equity portfolio managers. David has been recognized for enabling organizations to determine their enterprise and equity value for a variety of situations including strategic planning, sale or IPO, mergers and acquisitions, financial reporting (common stock, stock options grants, purchase price allocations, impairment analyses, etc.) and tax compliance (estate & gift, 409A, NUBIG). Industry experience includes, but is not limited to, professional services, business service, healthcare, information technology, financial services, and manufacturing & distribution.
