In early April, as the S&P corrected below 5000, numerous market experts suggested that a future market rebound would be different than what we have seen in the recent past. The level of uncertainty inherent in the market at that time was palpable. It was also proving to be extremely difficult to “handicap” the impact of universal tariffs & trade negotiations. So much so that many of these experts suggested that we would not see a classic “v-shaped” recovery.
Fast forward to the end of June, where markets are now testing their all-time highs (S&P trading above 6100), fueled by a combination of factors that many felt would not coordinate quite so beneficially. Take the Russell 3000 Index as an example (which represents the 3000 largest companies in America or 98% of the American public equity market). Over 80% of the Russell 3000 constituents are trading above their 50-day moving average pricewise. This suggests that this “unloved” bull market that we are in is indeed intact (at least for the moment). I suggest “unloved” because many investors have “sat out” this recent recovery. Fear of the aforementioned uncertainty caused many investors (and institutions alike) to remain defensive and even predominately in cash. Despite softer than expected GDP in Q1, general economic conditions remain surprisingly solid. The consumer remains employed (low unemployment), inflation continues to trend better, saving rates have increased, and AI investments remain at all-time highs. These factors should continue to fuel equities that participate in this powerful developing investment theme.
As a business owner, your job may seem like it includes a thousand responsibilities, but in reality, it boils down to two core goals:
Increase the value of your business
Remove the obstacles that prevent you from increasing that value
Which leads to the question at the heart of it all: What is the value of my business?
Before you can grow, protect, or sell a business, it is important to first clarify what “value” actually means. This article breaks down how business value is determined, why it often differs from what owners may assume, and how a professional valuation can empower better decisions, both now and down the line.
Why Business Value Matters for Better Decisions and Planning
We are living through the largest generational wealth transfer in history. By 2045, an estimated $84 trillion is expected to pass from Baby Boomers and the Silent Generation to their Gen X and Millennial heirs. A major part of that wealth is tied up in privately owned businesses, many of which are facing ownership transitions in the coming years. For some owners, a family succession is not an option, and they must plan and prepare to sell to an outside buyer.
Regardless of the path, for owners nearing retirement or exploring exit strategies, knowing the value of their business is the foundation for everything that follows. It informs tax planning, deal terms, timing, and ultimately, how well that wealth is preserved or passed on.
Importantly, the definition of “value” can vary depending on the purpose of the valuation. Different types of business ownership transactions call for different standards of value, each with its own assumptions and implications.
Summer is a season for adventure, relaxation, and making memories with family and friends. But, before you begin your summer fun, it's essential to make sure your financial house is in order. A little preparation now can go a long way in helping you truly unwind while minimizing stress when you return. Here’s a practical financial checklist to help ensure your summer is carefree and well-planned.
✅ Allocate Funds for Summer Fun and Travel
Whether you’re planning a beach getaway, attending summer camps, or simply enjoying local experiences, start by setting aside money specifically for summer activities. Review your monthly budget and designate a summer fund to cover travel, entertainment, and spontaneous outings. Having a clear budget prevents overspending and keeps your longer-term financial goals intact.
✅ Confirm All Insurance Is Paid and Up to Date
Before hitting the road or the skies, double-check that your auto, home, health, and travel insurance policies are active and premiums are current. Unexpected events can happen, and being fully covered adds peace of mind. Consider reviewing your policy coverages and deductibles with your insurance professional. It is better to make adjustments to your coverage before it is too late.
When assessing the worth of a business, two key valuation concepts often come into play: Fair Market Value and Strategic Value. While they may seem similar at first glance, each serves a distinct purpose depending on the context of the valuation.
Fair Market Value (FMV) is the price a business would sell for on the open market, assuming a transaction between a willing buyer and a willing seller, both with reasonable knowledge of the facts and under no compulsion to act. This is the standard used in most valuations for tax reporting, estate planning, litigation, and financial reporting.
Strategic Value, on the other hand, represents the value of a business to a specific buyer who expects to gain unique advantages from the acquisition. These benefits might include cost savings, market expansion, vertical integration, or intellectual property synergies—factors not typically reflected in FMV.
Key Differences:
FMV is objective and based on market norms; Strategic Value is subjective and depends on the buyer's unique circumstances.
FMV assumes a hypothetical buyer; Strategic Value considers a specific buyer with strategic motives.
Strategic Value is often higher than FMV due to anticipated synergies or competitive benefits.
Understanding the difference is crucial—especially when selling a business or negotiating with a strategic buyer—since it can significantly influence price expectations and deal strategy.
The Federal Funds Rate is the interest rate at which banks lend money to each other overnight — but its influence goes far beyond Wall Street.
When the Federal Reserve raises or lowers this rate, it affects borrowing costs across the economy, including credit cards, auto loans, mortgages, and business loans. A higher Fed Funds Rate generally means higher interest rates for consumers, which can slow spending and inflation, while a lower rate encourages borrowing and economic growth.
IRR (Internal Rate of Return) is a common way to measure the annualized return of an investment, assuming cash flows occur at regular intervals (like monthly or annually). But real-life investments aren’t always so neat.
That’s where XIRR (Extended Internal Rate of Return) comes in — it allows for irregularly timed cash flows, making it a more precise and flexible metric for measuring actual investment performance, especially in private equity, real estate, or portfolios with variable contributions and distributions.
Key Differences:
IRR: Assumes evenly spaced cash flows
XIRR: Handles cash flows on specific dates (more accurate in real-world scenarios)
Use Case: XIRR is typically preferred for client performance reporting or investment vehicles with unpredictable cash flow timing.
Understanding the difference is essential for accurately evaluating your portfolio’s true performance.
