What’s a Grocery Store Worth?
Major trends in the grocery industry are –
1. Sublease and add on services
2. Self-checkouts
3. Private label food
Factors that affect the valuation of a grocery store –
* If the location is leased or owned
* What is the duration of the lease
* Location of the store – what kind of demographics frequent the store and who are its biggest competitors
* Is it a franchise operation
* Does it has a history of strong operations and financials
Grocery stores are a low margin and high volume business. The trick to running a successful grocery store is a stable customer base.
The Rule of Thumb:
Grocery stores can sell between 0.1–0.30x on revenue. Average between 0.15-0.25x,
plus the cost of inventory in hand. The swing between 0.15-0.25x depends on the systems and processes in place to make the operation run smoothly. Which include proper inventory and POS, strong relationships with suppliers and community leaders; and a loyal customer base.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 2 BLOG: https://www.veristrat.com/blog-valuation/whats-a-grocery-store-worth/

What’s a Brand Worth?
I will help you understand the kind of cash flow a good brand can provide. The rule of thumb I am about to give you applies to all kinds of intangibles or intellectual property. Be that patents, or trademarks, or copyrights, or domain names, etc.
Step 1
A brand only has value when customers buy from Teeny because of her brand’s reputation of quality and consistency. Or put another way, would Teeny’s income suffer if the brand was changed to say Dolly’s Cakes?
If the sales suffer then Teeny Cakes as a brand may have a value. If you don’t think the revenue would suffer without the name Teeny Cakes, then Teeny Cakes as a brand does not have value and may not be able to generate passive income for her.
Step 2
Is the business profitable? If yes, then it may have a value, if not, the brand does not have a value or minimum value.
Step 3
Whatever is the business’s operating profit (or EBIT), you can assume that that brand can bring you royalties that are about 25% of that operating profit. So if the business is bringing Teeny an operating profit of 10%, then it could support a royalty of 2.5% on revenue.
Therefore, if Teeny Cakes’ annual revenue is $1M, then Teeny might be able to dictate annual royalty of $25,000.
This is just a simple rule of thumb. This rule is used as a starting point for determining royalty rates for decades. I share rules of thumb with you to help you estimate a solid ballpark of value. But it is not a substitute for a full valuation or analysis.
Step 4
If Teeny decided the sell the brand and not wait for the yearly cashflow then she might be able to get 3-5x on her yearly cash flow. So take 4x as average.$25000 time 4x = $100,000
If you use this rule of thumb for negotiations or as a starting point backed by further analysis you will be on strong grounds.
I hope that gives you a good understanding of how brands and royalty payments are valued.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 3 BLOG: https://www.veristrat.com/blog-valuation/whats-a-brand-worth/

What’s a Medical Practice Worth?
The most important variable when evaluating a medical practice is physician compensation. If you can isolate the cash flow that is paid to you as an owner of the practice versus an employee of the practice that is the Achilles heel of this valuation. Medical practices sell for 3-5x multiple on earnings. 3x when the practice is specialized, and more towards 5x when the practice is internal or family medicine.
Lower multiples within that range might be seen in a medical practice consisting of older physicians in a specialty affected by managed care, for example, whereas a valuation of a practice consisting of younger, primary care practitioners who will benefit from managed care might use a somewhat higher multiple. Medical practice owners are not seeing the traditional financial returns they’d seen in the past. That leaves an opening for private equity that can acquire say, a hundred practices and in theory, achieve the economies of scale inherent in a larger organization.
Things like bulk purchasing, insurance, centralized billing, and IT services, all make physicians practice ideal targets for the right acquirer.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 4 BLOG: https://www.veristrat.com/blog-valuation/whats-a-medical-practice-worth/

What’s a CPA Practice Worth?
In the last 20 years, CPA practices have had bittersweet experiences from two dimensions – software and outsourcing.
Nevertheless, if you are a CPA there are three things that attract buyers –
1. Recurring revenue
2. Location
3. Technology
Value is significantly affected by how much upfront payment the seller wants, and how much is she willing to finance or receive via earn-outs. The rule of thumb here is that the more upfront payment demand, the lower the value.
The key to valuing a CPA practice is to understand the difference between the value of the practice and contribution of the professional based on individual relationships. If a practice is heavily dependant on the operator it makes it difficult for a new buyer to acquire and integrate into a bigger practice. Whereas, if a client-based is loyal to the brand of the practice, it is relatively easy to integrate into a bigger practice.
I hope this episode has helped you understand the value of your practice…
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 5 BLOG: https://www.veristrat.com/blog-valuation/whats-a-cpa-practice-worth/

What’s a Retail Business Worth?

While shopping online at Amazon or watching Netflix, we forget that there is a whole world of brick and mortar retail businesses that still sell $150 billion worth merchandise via 100,000 outlets nationwide, and employing over 600,000 people!

Factors for running a profitable retail business are –
1. Technology – Technology has hurt brick and mortar retail for obvious reasons. But it has also helped for non-obvious reasons by allowing product customizations and inventory management.
2. Private Label Brands – to cut back on the cost of goods, and creating an in-house brand that you have 100% control over, retailers are creating their own niche and private label brands.
3. Organic and ethical sourcing – buying products from sources that promote self-reliance on energy and minimize carbon footprint.
4. Online advertising – just because a store has a physical location doesn’t mean it cannot have an online presence and marketing.

 

The biggest value drivers in retail are –
1. Lease – if the lease is long term and less than 10% of gross sales and does not increase more than 4% annually.
2. Inventory – higher the inventory turnover the better.
3. Niche stores with loyal customers and higher margins are worth more.
4. Low employee turnover creates a sense of community, and promotes customer loyalty.
5. Locations with high foot traffic and flexible hours are worth much more.
Rule of Thumb
A retail business can sell for 0.25-0.35x on revenue, or 2-3x of SDE.
The factors that affect the spectrum the most are – product niche, convenience, customer experience.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 6 BLOG: https://www.veristrat.com/blog-valuation/whats-a-retail-business-worth/

Self-storage is one of the most profitable and stable real estate investment there is. No wonder there are over 50,000 self-storage facilities in the US, with $40 billion in annual revenue, and 80% of them are owned by individuals or private investors.
With globalization, this business is growing rapidly in Asia and Eastern Europe.
Here are the four biggest trends in this business –

1. Technology
2. Aesthetics
3. Millennials and Boomers

4. Valet and portable self-storage

Rule of Thumb

Remember V = B/C from Episode 1? (https://youtu.be/IZJ6kC6NIUI)

B for self-storage businesses is NOI (Net operating income).
NOI = Revenue – Expenses
Expenses include everything that is required to operate the business. Including property taxes and excluding any loan payments.
Revenue is Gross Revenue after any concessions or discounts.

C is the capitalization rate. Which in simple terms is the cost of owning the business. The lower the cap rate, the higher the value. In the self-storage business, the cap rate can vary between 6.5 – 8%.
New buyers beware that the NOI will adjust after the transaction, especially since property taxes will be reassessed. Smart buyers appeal tax assessments and get them reduced.

Three tips that can help increase the value of an existing facility –

1. Maintenance and aesthetics
2. Good records
3. Security
This business is not glamorous. But if you are looking for a real estate heavy investment/business. Look no further. This investment is better than any multifamily or commercial complex.

If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 7 BLOG: https://www.veristrat.com/blog-valuation/whats-a-self-storage-business-worth/

What’s a Construction Business Worth?
Construction is one of the largest industries in the US. Its annual revenue is $1.7 trillion; spread over 700,000 businesses, and employing over 7 million people.

There are four trends reshaping the future of this industry today –
1. Technology
2. Go Green
3. Modular and Prefab –
4. Safety and Labor
Rule of Thumb

The value of a construction business can vary from 0.20-0.30x of annual revenue or 3-5x of EBITDA.
What affects where you are in the range?

There are five factors that smart buyers look for and pay big money for –
1. Size
2. History
3. Backlog
4. Financial strength
5. Business cycle

The upside of making a fortune is unlimited. No wonder why many immigrants in America gravitate towards it to fulfill their American dream.

Construction business owners today are no less than the Andrew Carnegie, or George Hearst, or Elon Musks of the world. Except their fortunes are built on REAL things, for REAL people, in the REAL world.

If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 8 BLOG: https://www.veristrat.com/blog-valuation/whats-a-construction-business-worth/

What’s a Preschool Worth?
There are about 600,000 private and non-profit preschools in America, collecting annual revenue of over $60 billion, with 1.6 million employees. A majority of them have fewer than 25 employees.
The five biggest trends in preschools are –
1. Start them early – traditionally, preschools were far and few, and saturated by working parents who needed someone to look after their precious ones while they work. Now, preschools are used for enriching a child’s worldly experience, giving their education a kick-start.
2. Specialized curriculums – call it Montessori, or Waldorf, or Reggio Emilia approach towards education. Curriculums based on interest-driven learning, allowing children to set their own pace. Many affluent parents in larger cities seek such preschools.
3. Natural Fitness – schools involving yoga, dance, and other physical activities in natural surroundings push children towards their innate curiosity.
4. Technology – schools that integrate technology in all aspects of their operations are hard to beat. This includes – attendance and enrollment; camera and monitoring for safety; events and fundraising etc.
5. Corporate and Community – companies now understand the importance of good childcare and the expense associated with it. Many offer in house facilities, or partially fund the expense. Many community centers have also started specialized preschools, which teach children native languages, religious texts, and other sought after teachings.
Rule of Thumb!
A preschool’s value depends mostly on – size; reputation and loyalty; enrollment and earnings; facilities and compliance; and real estate.
The value varies from 1-4x of Seller’s Discretionary Earnings (SDE)
SDE = EBITDA + Owner’s Compensation
If real estate is included, depending on the location, and size of the facilities, value can be two to three times the business’s value.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 9 BLOG: https://www.veristrat.com/blog-valuation/whats-a-preschool-worth/

 

What’s an Auto Repair Shop Worth?
There are over 260,000 auto repair shops in America, employing over half a million people, and generating revenues of $70 billion annually. 80% of such shops are owned privately by individuals.

These four trends are reshaping this business as we speak –
1. Leasing versus Buying – Millennials are one of the largest projected consumers of cars, and they prefer to lease from the dealership or use rideshare services. If they lease, the services and repairs are also done at the dealership.

2. Cars last longer – useful lives of cars have increased dramatically allowing people to retain cars longer, requiring more service, repairs, and parts for older cars.
3. Electrification – demand for electric or hybrid and fuel cell cars is on the rise. Many such cars require expensive parts, special training for technicians, and certified software upgrades from the manufacturer.

4. Shortage of Labor – the increase in demand for more software savvy technicians has added pressure on the already short supply of experienced and qualified technicians.

Rule of Thumb

Auto repair shops sell for 25-40% of their annual revenue, plus any excess inventory. Machinery and equipment are included in this rule of thumb.
Only add excess inventory in case the business runs inventory heavy for example tire shops.
75% of auto repair shops have revenue of less than $1M, which seems to be the tipping point at which the value increases, as buyers want to invest in auto shops where they can hire a manager and be absentee owners.

A few points that appraisers and buyers will be paying attention to and can help you maximize the value of your business…

1. Curb Appeal – no one wants to visit an auto repair shop that’s shabby or in a disarray. Keep your workplace clean, organized, with a fresh coat of paint and clean uniforms.
2. Customer Loyalty – customers appreciate honest and knowledgeable mechanics and auto shops. Having a customer loyalty plan with small facilities like tire storage, drop and pick up, payment plans, etc. will keep the customers happy and returning. A friendly customer waiting area is always a plus.
3. Online Marketing – positive online reviews, an easy and friendly website with strong SEO, and published pricing will attract customers and project an image of quality and transparency.
4. Relationships with Suppliers and Insurance Companies – good suppliers will help you keep your costs low, and insurance direct repair programs will keep the revenue consistent. Need I say more?

The demand for auto repair shops will never run out. This is one of the few businesses that is almost recession-proof.
This business is built on the oldest currencies known to man. Trust and Transparency.

If you can run a simple but honest operation, customers that need you will keep coming back and bring in friend search time.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 10 BLOG: https://www.veristrat.com/blog-valuation/whats-an-auto-repair-shop-worth/

What’s an Auto Dealership Worth?
There are over 18,000 new auto dealerships in America, with revenue over $400 billion, and one million employees.
Despite popular belief, the auto dealership is what I call a ‘business card’ business. It looks sexy on your business card that you own a car dealership.
Most auto showrooms are very cool with their fancy layout, free snack and coffee, and other glamorous activities to attract customers. But that is just on the surface. In reality, it is a high volume low margin grind, with too many moving parts –

• manufacturer watching every move like a back seat driver and pushing to pick up more and more inventory;
• big fixed overhead and low margins per sale;
• change in consumer behavior, and ever-increasing demand for transparency shrinking already razor-thin margins;
• competitive pressures from not just other car dealerships but substitutes like car rentals and car-sharing companies;
• high exposure to the economic cycle, interest rates, and oil prices

There are three trends reshaping this industry as we speak –
1. Battle of the Generations
2. Demand for Transparency
3. The Next Big Thing
Rule of Thumb
An auto dealer is a combination of tangible assets and Blue Sky Value. Tangible assets include the cash in hand; inventory; equipment; facilities, improvements, and real estate. Blue Sky Value includes the goodwill of the business or the value of the overall going concern itself including the value of the franchise. The combination of these two asset classes comprises the value of the overall business.

Tangible Asset Value = Cash + Inventory + Equipment + Facilities + Real Estate
Blue Sky Value = Blue Sky Multiple x EBITDA
Blue Sky Multiple is the standard multiple used in this business, varies between 2-9x. The spread depends on four factors –

1. Franchise
2. Future Growth of Earnings
3. Location and Quality of Facilities
4. The Economy
If the dealer has an established name locally, buyers will come in for the new cars and their wallets will stay for their after-sales needs.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 11 BLOG: https://www.veristrat.com/blog-valuation/whats-an-auto-dealership-worth/

What’s a Sporting Goods Store Worth?
Sporting goods stores are businesses that sell athletic apparel, athletic footwear, sports equipment, and related rentals and service. They could cater to men, women, and children. There are over 41,000 brick-and-mortar sporting good stores in the US, collecting $45 billion in annual revenue, keeping over 250,000 people employed.

There are four trends reshaping this industry as we speak –
1. Athleisure
2. Personalization
3. Sustainability
4. Online Competition
Rule of Thumb
25-30% of annual revenue, plus the cost of on-hand inventory.
The trick is to maintain your margins between 25-45%, keeping the rent within 5%, and over three times inventory turnover annually.

There are four factors that affect the value of this business –
1. Supplier Relationship
2. Customer Loyalty
3. Location
4. Good Records
The trick to this business is to continuously sell bigger and better to existing customers. If you have strong community relations, the customers will come in for essentials, but they will return for their growing families and sizes, and evolving interests.

If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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EPISODE 12 BLOG: https://www.veristrat.com/blog-valuation/whats-a-sporting-goods-store-worth/

There are over 7,000 wineries in America that employ 58,000 people and make $26B annually. There are four trends reshaping this industry as we speak.

1. Keeping up with the Jones’
2. New Regions
3. eCommerce
4. Enotourism
Rule of Thumb

There are three types of wineries – fully integrated; merchant; and hybrid. In this episode, we will focus on merchant wineries. These wineries are not tangible asset-heavy and focus their efforts on distribution, sales, and branding. They may have small production operations which may only be a fraction of their total sales.

Wineries generally sell for a multiple of EBITDA (Earnings before interest, taxes, depreciation, and amortization). The median multiple for a merchant winery can be 8-10x. However, this multiple is highly dependent on the buyer’s perception of the brand, and their plans after the acquisition. If the wineries’ brand is popular and dictates a premium, and if real estate is included, then the multiple can be between 12-20x.

There are three things winery owners can do to maximize the value of their business –

1. Tell your story

2. Adapt or die
3. Keep your House in Order
Many Baby Boomers purchased or started wineries in the wine boom of the 70s and 80s. These owners need to retire, and their children do not want to take over, creating a void. Many wineries will on the chopping block over the next 5-10 years. Creating a ripe environment for the right buyers.

They say you make money in the wine business when you sell the winery.
I disagree. The next 5-10 years will be a time when you can make a fortune in the wine business if you know what to buy.

If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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Hawkes Winery: https://www.hawkeswine.com/
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EPISODE 13 BLOG: https://www.veristrat.com/blog-valuation/whats-a-winery-worth/

Did you know that HVAC alone comprises of 5-8% of a building’s value?  So for your average $500k home, the HVAC alone can be $25-40k.  And HVAC components are the ones needing most work post installation?
There are over 105,000 HVAC contractors, employing 600,000 people, and making $85 billion in annual revenue.  There are three trends affecting this business –
Trends
1. It is all connected
2. Green and sustainable
3. Transparency
Rule of Thumb
HVAC contractors can sell for 0.25-0.35x on revenue, or 2-4x of SDE.  Plus, the fair market value of inventory, property, plan, and equipment.
There are four things that will help current owners maximize their business’s value –
1. Customer Service
2. Loyal and Certified Technicians
3. Annual Service Agreements
4. Professional Management
If you keep your customers happy, run a happy team of employees, and keep your books clean, your business will accrue value overtime.  The problem with most owners is that they have watched too many ‘Wall Street’ type of films and want to get rich within a few hours, and start making decisions for short term gain.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./
EPISODE 14 BLOG: https://www.veristrat.com/blog-valuation/whats-a-hvac-contractor-worth/

Golf industry like any recreational industry booms in good times.  Today there are 17,000 golf courses in America, making $20 billion annually, for the pleasure of over 100 million golfers.  Yes, that is every 1 out of three people in America either plays or watches golf.
There are three latest trends evolving this industry and the game –
1. Less is more
2. Tech and fashion
3. Environment
Rule of thumb
Golf courses used to sell for 8-10x on earnings or EBITDA.  But since only 20% of the golf courses have positive cash flow, the more prevalent measure of value is the revenue multiplier.
Average golf courses sell for 1-1.5x of its annual gross revenue.  Depending on location and quality of the course, this multiple can be as low as 0.5x or as high as 3x.
There are four reasons investors pay big money for when buying golf courses –
1. Cash flow
2. Highest and best use
3. Low CapEx
4. A strong reputation
One of the most fascinating things about golf is how it reflects the cycle of life. No matter what you shoot – the next day you have to go back to the first tee and begin all over again and make your self into something. – Peter Jacobson
If you are a golf course owner or a future investor, look for courses that can be transformed for the new and upcoming golfers. We have seen time and time again, that the species that survive aren’t the strongest but the ones who adapt and overcome the fastest.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./
EPISODE 15 BLOG: https://www.veristrat.com/blog-valuation/whats-a-golf-course-worth/

Landscaping and lawn care is a $70 billion industry with 600,000 employees spread over 95,000 businesses.
There are three trends affecting this industry –
1. Outside is inside
2. Organic and Renewable
3. There is an app for that
Rule of Thumb
Landscaping businesses sell for 2-4x on SDE or 3-6x on EBITDA.
The key is to find the right buyer.  Businesses worth less than $250k have difficulty attracting buyers.  If you are selling to a competitor, you may not receive the best value as they will discount the value of your brand, equipment, and staff.
Competitors who focus on different locations, or strategic buyers like property management companies, or irrigation and stormwater contractors may perceive the most value of your business.
Four things buyers look for –
1. Loyal Clients
2. Clean Books
3. Reputation
4. Efficient Operations
The best way to increase your property’s value is to have a blooming garden with lush trees and landscaping.  Definitely, a sure shot to make your neighbors love you.  And what better way to do that than to hire a landscaping company…
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./
EPISODE 16 BLOG: https://www.veristrat.com/blog-valuation/whats-a-landscaping-business-worth/

An Entrepreneur’s Perseverance
Why do owners buy businesses? Why would a person not retain their 9-5 well-paying jobs instead? What is the lure of becoming an entrepreneur?
In this episode, I will share some war stories of a resilient entrepreneur and her journey…
In November 2019, Jennifer Archey purchased Playful Potter for $80,000. Paid cash from savings that she and her husband saved from their regular 9-5 jobs.
When they met a financial planner, they realized that their savings, and rate of savings will not sustain them in retirement. Both Jennifer and her husband are in their mid-thirties. She wanted to be proactive, and be financially independent within 10 years.
Playful Potter wasn’t the business she had set out to purchase. Her original plan was to buy a self-storage facility. Jennifer had done her research and knew they make great investments. I agree. Watch Episode 7, if you want to know why.
She used to visit Playful Potter as a customer with her two young children. While searching for self-storage investments, she stumbled upon Playful Potter and leaped on the opportunity, thinking what’s better than owning a business that her family enjoys.
After the acquisition, Jennifer immersed herself in the business, and the results started to show. Her business took off. Moreover, the cash followed.
Then….
…the pandemic hit. A brick and mortar owner’s worst nightmare.
What was she to do? It was a crime and medical hazard to open.
Playful Potter’s 2019 revenue was $181k, which dropped by half in 2020. All her expenses, including utilities, online presence, marketing, accounting, subscriptions, all stayed constant.
Her biggest problems were – 50% drop in sales, recurring expenses that were now greater than revenue, the uncertainty of the future of her business, OSHA inspectors looping over her aching to hand out $5-10k fines for non-compliance for COVID, and $37k spent to keep the business afloat since March, which is in addition to the $80k she spent for the business.
Being the resilient owner she is, Jennifer decided that she has to move her business’s customer interface online. She did. Jennifer pushed all her inventory online. Created packages online. Revisited pricing. Rebranded her services. All within 12 hours of the COVID shut down.
It helped. Regular customers who couldn’t part from their ‘art’ fix, started purchasing online, and her business finally received the most needed oxygen.
She furloughed one out for three employees. Received 22k from PPP and EIDL. And working with her landlord who forgave one month’s rent, and delayed payments for two additional months.
This is what she could do from an appraiser’s perspective….
Double down on social media…feature her customers, feature birthday parties, involve non-profits
Develop tutorial videos…
Develop monthly and quarterly membership plans for 50% of her regular customers. This will ensure she is secured for the $8k of her monthly fixed expenses.
In addition, if she is considering selling her business, a new owner will only purchase Playful Potter if they see recurring revenue.
“what separates successful entrepreneurs from non-successful ones is pure perseverance” – Steve Jobs…
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./
EPISODE 17 BLOG: https://www.veristrat.com/blog-valuation/an-entrepreneurs-perseverance/

What’s a Senior Home Worth?
EPISODE 18 BLOG: https://www.veristrat.com/blog-valuation/whats-a-senior-living-facility-worth/
Do you know the cost of growing old?  What would it cost a senior citizen to live comfortably, with proper medical attention, and dignity?
Depending on location, and their medical needs, the cost can vary between $4000-8000 per month.  Moreover, that is after tax.  That means a retired person needs to have either of the two things –
annual after-tax income of $50,000-$90,000 or a net worth of $700,000 assuming the senior citizen only utilizes assisted living for less than 10 years.
Given that 22% of the population are baby boomers, this wealth and expense gap is becoming a major American crisis.
There are over 31,000 assisted living facilities in America, making $80 billion in revenue, and employing over 900,000 people.  Three trends reshaping this largely traditional business –
1. Locations do not matter
2. Government spending
3. Are we on a cruise?
Rule of Thumb
Remember V=B/C from Episode 1?
This rule of thumb is for a going concern, which is the entire business including real estate, operations, and goodwill.
V = B/C
NOI = net operating income.  Cash flow from the business, before the mortgage, or cost of financing, and before taxes and non-cash expenses.
Cap Rate = capitalization rate – the cost of operating and owning the business.
Independent Living Facility 8-9%
Assisted Living Facility – 9-10%
Memory or Specialized/Nursing Facility – 10-12% – due to higher cost of operations equating to higher risk the cap rate is higher
Continuing Care Retirement Community – 10-11%
Sometimes facilities are valued based on the number of licensed beds or square footage.  However, valuations based on the above rule of thumb are more acceptable.  Individual investors who may have certain investment KPIs in mind generally use the rules of thumbs based on beds or square footage.
There are three things that current owners can work on to maximize the value of their current facilities –
1. Local reputation
2. Quality of facilities and staff
3. Internal controls
Buyers like to buy facilities that they can run remotely like on autopilot.  How close can you bring your facility to that?
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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WEBSITE: http://www.veristrat.com
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 19 Blog: https://www.veristrat.com/blog-valuation/whats-a-law-firm-worth/
Law as a business supports $350 billion in revenue in America, spread over 500,000 firms, and employing 1,500,000 people.
This business and profession is being affected by four trends as we speak –
1. Legal tech
2. Overhead
3. Boomer transitions
Rule of Thumb
Law firms are usually priced on a multiple of three-year average gross revenue. Think of it this way, what would you expect in referral fees if you were to send all your business to another attorney? 10%, maybe 15%, maybe 25% of the fees?
Hence, if you estimate revenue from current clients for the next five years and charge a referral fee on that what could, you expect to earn.
Keeping this calculation in the foreground, law firm value can vary between 0.5-1.25x of revenue. While importance is given to recurring revenue, or revenue that is generated from repeatable, transferable, and specific marketing activities.
A law firm is one of the few industries where the valuation of practice not only depends on the buyer and seller but also on the client.
There are four factors that affect the spread between 0.5x and 1.25x of revenue.
1. Quality of attorneys and staff
2. Lease terms
3. Geography
4. Finally, Less upfront and more in transition
We may sometimes forget law is a business. Practices that support recurring revenue like corporate law, wills and estates, intellectual property, litigation are generally worth more than practices that cannot guarantee a steady stream of revenue like personal injury, immigration. Evolving practices in regulated areas like cannabis are most sought after.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 20 Blog: https://www.veristrat.com/blog-valuation/whats-a-roofing-company-worth/
Being a roofer is one of the most dangerous jobs anywhere.  Imagine dangling 100 feet in the air, balancing without a harness, trying to carry heavy tiles, and measuring the alignment.  This is what they do 81-0 hours a day.  Everyday!  To me, they are the gladiators of the American construction industry…
No wonder there are over 100,000 roofing companies in America making $45 billion, and employing 260,000 people.
There are three trends pushing this ancient skill into the future…
1. New Materials
2. Technology
3. Customer Success
Rule of Thumb
Roofing businesses sell anywhere between 0.2-0.3x on their annual revenue or 2-4x SDE plus the fair market value of any tangible assets.
There are four things you should consider to maximize the value of your roofing business:
1. Referral Network
2. Trained Employees
3. Insurance and Liability
4. Online Presence
Roofing contractors gain long term.  If you working with a roofer who has been in business for less than 10 years, it is most crucial to continue to build your reputation.  The customers who may have purchased a roof from you returns for the second time, that is the real win here.  The question is if your business there yet?
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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WEBSITE: http://www.veristrat.com
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 21 Blog: https://www.veristrat.com/blog-valuation/whats-an-ecommerce-company-worth/
Can you tell the difference between virtual and reality?  Do you feel like Neo from the Matrix sometimes, where you cant tell the difference between reality and augmented reality?
The world of online retail is based on this very prefix.  Let’s see what an eCommerce business is worth…
There are approx. 3 million eCommerce companies operating 20 million sites globally.  The eCommerce sector is poised to hit over $1 trillion in revenue by 2022.
There are three trends affecting this rapidly evolving business –
1. Influencers
2. Personalization
3. Artificial Intelligence
Rule of Thumb
Companies with revenue under $5M, are sold at 2-4x on SDE. Seller’s Discretionary Earnings. The range depends on – the quality of earnings, the stability of traffic, and efficiency of operations.
How to Maximize Value?
1. Focus on customer experience
2. Partnerships
3. Reduce owner involvement
Communication is at the heart of eCommerce and community building. The key to virtual reality or any kind of online experience is closely replicate the in-person experience at a touch of a button, anytime, anywhere. How close is your business to that?
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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WEBSITE: http://www.veristrat.com
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 22 Blog: https://www.veristrat.com/blog-valuation/whats-a-restaurant-worth-2/
There are over one million restaurants in America. Over 50% of them are owned by baby boomers. An average boomer is 66 years old. The average retirement age in America is 63.
Let’s see what a restaurant is worth…
Think Robert De Niro from Casino walk around and greeting guests. Oh, wait. No way even close! Owning and running a restaurant is like a never-ending marathon that goes on seven days a week. I know. I used to own one.
There are three things that are changing the restaurant industry as we speak…
1. Stay connected
2. Healthy, tasty, and fast
3. Local and Sustainable
Rule of thumb
Valuing a restaurant varies based on whether the restaurant is full-service, a bar, or a more simplistic establishment like an ice cream shop or café. As your revenue increases, the revenue
multiplier decreases, ranging drastically from 0.15x – 0.4x for a full-service restaurant and 0.25x
– 0.5x for a small shop.

If you’re working with a franchise, add 0.1-0.15x to these multipliers. Why? Franchises are the
autopilot piece, helping with suppliers, hiring staff, and with proper operation and management systems.

There are FOUR other FACTORS that affect the multiplier:
1. Customer loyalty
2. The lease
3. Online presence
4. Presentation
Mark Twain said, “Part of the secret of success in life is to eat what you like and let the
food fight it out inside.”
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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WEBSITE: http://www.veristrat.com
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 23 Blog: https://www.veristrat.com/blog-valuation/whats-a-sign-company-worth/
The sign industry provides us with retail signs, billboards, and many indoor and outdoor corporate and institutional signage.
There are over 30,000 sign businesses in American making $15 billion and employing 100,000 people.
There are three trends reshaping this business as we speak…
1. Biophilic Design
2. Collaborate with the Competition
3. Digital and Shiny
Rule of Thumb
A sign business’ value is between 2-3.5x on SDE plus cost inventory and tangible assets, or 45-60% of annual revenue plus cost of inventory and tangible assets.
There are three factors that can help maximize your sign business’ value –
1. Show and Tell
2. Hunt in Packs
3. Staff Training
While producing this video, I reflected back during the stone age or the Flintstones. Even they had signs. The Parthenon has inscriptions. Signage of that age. Saint Peter’s Basilica has Latin inscriptions. The Taj Mahal has Persian inscriptions.
And I am sure the streets, homes, businesses even in Mesopotamia had signs. They may not be like the ones we now have in Las Vegas or Times Square, but they were there.
Sign businesses existed then, and they exist now.
As Charles Darwin said – It is not the strongest of the species that survive, nor the most intelligent, but the one most adaptable to change.
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Link to Blog: https://www.veristrat.com/blog-valuation/whats-an-insurance-broker-worth/
There are over 400,000 insurance brokers and agencies in America, making $160 billion in annual revenue, and employing over a million people.
There are four macro trends driving this industry. My colleague and CEO of CAL Insurance, Joe Delucchi, will share his perspective as he runs one of the fastest-growing insurance broker firms in California.
Trends
1. New Client Acquisition
2. Leveraging Technology
3. Client Advisor
4. Employee Retention

Rule of Thumb
Insurance brokers are valued based on earnings. 4-8x EBITDA.
This range can vary depending on the product mix and longevity of the business.
There are three most important factors when it comes to maximizing an insurance broker’s valuation –
1. Institutionalized Relationships
2. Diversified Products
3. Tech Rigor
One question that I always ask when interviewing someone for my team, is who is most important for a company – customers, employees, or shareholders? I frankly enjoy asking this question, because it is most revealing.
If someone were to ask me this question for an insurance broker, I would say neither. This is a relationship business. Simple. Insurance salesmen, business owners, and underwriters who realize this thrive.
An insurance broker is not a business that makes you rich overnight. In fact, starting as an insurance broker is an uphill battle. But, once a business has established relationships with its customers and commits to support them long term while recognizing underwriters’ need for transparency and respecting its workforce, the sky is the limit.
Because revenue in this business is like the energizer bunny. It keeps going, and going, and going….unless you stop keeping your promises…
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Link to Episode Blog: https://www.veristrat.com/blog-valuation/how-to-double-valuation/
Main Street business owners and venture capital founders, have asked me on uncountable occasions – how can businesses sell for billions, when they do not have the revenue or earnings to support the astronomical valuations?
How can founders and owners sell their business for millions?  What are these high-paying buyers looking for?
And most importantly how can they position their business for a blockbuster exit and retire on a luxurious yacht like this one….
Let’s see how to maximize your business’ value and sell for millions…
There are over 32 million businesses in America.  95% of them have revenue less than $5 million.  60% of them are owned by baby boomers.  80% of Boomers are looking to retire in the next 5 years.
This is creating increasing the supply of businesses for sale exponentially.  So how can you stand out?  How can you sell your business for millions?  What do buyers of such businesses look for?
When it comes to M&A, buyers are looking for two and only two things…
One.  Consistent Cash Flow.
Two.  Autopilot.
So how do you make this happen?  How can owners create consistent cash flow and have it run on autopilot with the least involvement?
There are two things owners can implement today to double their business’s value within 6 months –
One. Recurring Revenue.
Two. Automate Everything.
Of course, not everything can be automated. I understand. But ask yourself and your team what can be. Start with simple things like making recurring online payments. Or automated reminders for receivables. Or notifications for customer contract renewals.
Basically, reduce the busy work of the owner and managers. So they can focus on customer experience and improving product and sales. A buyer is not interested in doing busywork, they want a business that has good automation so they can focus on how to strategically grow the top line.
Ever wonder why real estate is such a coveted investment?  Because it is like a tree that gives the investor both fruit and shade.  The fruit is consistent cash flow as recurring revenue, and shade is appreciation in value or time and place for the owner to rest because of automation.
If you can make your business like a real estate investment you have won. Because, unlike real estate, businesses can grow 100% annually!
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
INSTAGRAM: http://www.instagram.com/whatsitworthtv
WEBSITE: http://www.veristrat.com
FACEB00K: http://www.facebook.com/whatsitworthtv
LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 26 Blog: https://www.veristrat.com/blog-valuation/whats-a-saas-company-worth/
SaaS is a $120 billion industry spread over 11,000 companies. On average enterprise, an enterprise customer spends $3500 per employee on annual SaaS subscriptions. That is more than what they spend on bonuses at many places.
Kristie Prinz, a Silicon Valley attorney specializing in SaaS will outline the latest trends in SaaS today…
1. Flexible Pricing
2. Unbundling of Products
3. Customized Products
Rule of Thumb
SaaS companies with revenue less than $5M are valued using SDE or earnings. The earnings multiple varies between 3-5x.
If a company has revenue of more than $5M, and over 50% YOY then the valuation metric is revenue, as they are investing their earnings in growth, which will give delayed returns to a buyer. Such companies are valued at 5-10x on revenue.
Don’t be fooled by 15-25x revenue multiples of the large public SaaS companies. You are not them. Yet. These companies are established and have different benchmarks and expectations of them.
Believe it or not SaaS is now 25 years old segment, and buyers of these companies have become very sophisticated, and target companies with particular KPIs.
I have valued over 100 SaaS companies, including some of the biggest names you can think of, and been part of two SaaS exits. I will share the insider’s secrets so you can maximize the value of your SaaS company….
1. Customer Satisfaction
2. Built to Last
3. Adapt or Die
If you like what you heard, be sure to subscribe!
I am starting this channel to educate people on valuations and how to use them to their advantage.
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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Episode 27 Blog: https://www.veristrat.com/blog-valuation/how-to-think-bitcoin/
In this video, I will share insider secrets on how to ‘think’ about Bitcoin.
I am not going to get into details of what Bitcoin is, how it works, or why you should or should not invest in it. There are various other videos you can visit to learn that.
Let’s think Bitcoin…
Let’s hear from Garrett Goldman, who is a technology genius, and will share why he thinks Bitcoin is the future. Take it away Garrett…
We have another $1.9 trillion stimulus package working its way through the system now. The influx of all of this new paper money reduces the value of dollars already in circulation and the valuation of our dollar has real consequences. Our buying power is eroding quickly. So, I am interested in investments that can protect against the ravages of inflation. In the past Gold was active as a great hedge to inflation.
But people are not flocking to it as they have for millennia and despite the fertile growing conditions the price has stagnated. There is only one reasonable explanation for this, Gold is finally being replaced by something better, and that something better is Bitcoin. Bitcoin is decentralized, censorship-resistant. It is easy to store and send. Its performance is also unmatched. It’s the best performing asset on earth in the last 10 years.
Some of America’s oldest financial institutions are even beginning to align themselves with Bitcoin. Including the Bank of New York Mellon, Morgan Stanley, and Soros Fund management. Finally. I love the community. I am forever fascinated by the founder Satoshi Nakamoto. And the mythology that Bitcoin celebrates.
Let’s start with income. The income approach is simple. Estimate the future cash flows from the asset, and present value them based on a reasonable discount rate.
Well, in Bitcoin’s case, there is no future cash flow. There are no dividends, no payouts, no earnings. You will only make money when you sell. So the income approach is out.
Second. Market or sales comparison approach. Here we take a similar asset with a market transaction and correlate its value to our subject i.e. Bitcoin. What asset is most similar to Bitcoin? Etherium. Other cryptos? If yes, then why are their values so different. What’s so special about Bitcoin?
In absence of any comparative asset, I cannot apply a market approach.
What will it cost to rebuild or recreate a Bitcoin?
Is it worth the system, the code, the software it runs on? If so, how do you value that? Its system is hidden and not available for public scrutiny? In which case, again, the cost approach is inapplicable.
So the three approaches to value did not work. Because its value is unquantifiable using traditional methods. This is why let’s focus on how to think Bitcoin.
Imagine you are a pioneer heading out west in search of land, abundance, and freedom.
You pass a thousand miles of fertile plains of the Mississippi and middle America, and come to the Rockies!
Now, if given a choice what would you buy. Would you buy the valleys, or the hills, or the rivers, or the trees? One might say why not all!?
What is the worth of that valley? Or that river? Or the trees?
And while trading tangible assets like oil, land, lumber, and gold, fortunes were made and lost, these are tangible assets. Things that can be used in our daily lives.
As Bitcoin investors, you are in the same position as the pioneers who were trying to estimate the value of America’s natural resources in the 1850s.
Or think of the dot-com boom in the late 90s. Did you know which dotcom was valuable and which one not?
One could buy a dotcom for $10 a year (still can) but the domain name itself (without any pre-existing name recognition) is worthless.
Similarly, any cryptocurrency without underlying assets or use is pure speculation like domain names or art.
Why does someone pay hundreds of millions for a Picasso or a Pollack? Because they think that if they buy it today and hold it, it will be worth more tomorrow. No reason, no rationale, just based on the human need to attain the unattainable and inflation.
When you buy Bitcoin, think of it like buying a piece of art or land in the open west. It might be worth more…some day…
…so long as the authorities do not find reasons to declare it illegal.
Did you know, gold was illegal to own between 1934 and 1975? I am sure some of you are thinking why would the authorities make Bitcoin illegal….
I don’t think the government will make Bitcoin illegal….so long as it is traded and based on the US dollar. Like gold, or oil.
But, if Bitcoin emerges as an independent currency…all bets are off!
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Episode 28 Blog: https://www.veristrat.com/blog-valuation/what-are-sharks-looking-for/
Twelve seasons. 260 episodes. Mark Burnett. Mark Cuban. Mr. Wonderful. ABC, CNBC. Shark Tank. An American legacy.
I have had numerous requests to do an episode on Shark Tank. Thank you all for your ideas and encouragement…
We have all watched Shark Tank. One question I always get asked is what are Sharks looking for? What attracts them to a company? What products do they invest in? What is their bait?
Let’s see…How to bait a Shark?
After analyzing data for over 800 deals I have narrowed down five factors that Sharks follow prior to making investments…
1. The Founder
2. Market Demand
3. Business Model
4. Traction
5. Valuation and Exit
Because the Sharks have unlimited capital, they can invest any amount, if they can foresee a 100% return. Think of them as blackjack players in Las Vegas. They just looking for the hand that doubles their money.
If an investment gets 3 out of 5, it is debatable. 4 out of 5, not bad. 5 on 5, I gotta have it!
Sharks know when a rocket ship is about to launch. If they think the investment is like SpaceX, they want in. At any valuation.
As Sheryl Sandberg once said, “if you’re offered a seat on a rocket ship, don’t ask what seat! Just get on.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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Episode 29 Blog: https://www.veristrat.com/blog-valuation/whats-a-patent-worth/
A venture firm wanted me to value a company they planned to invest $17 million in.  The company had zero revenue but the Founder has eight patents.
Made me think how important patents are for company valuations.  They are a promise for protecting a company’s future.
Investors and buyers always ask if products have patent protection.  That is because patents lend credibility to a product.
There are over 3 million patents granted by the US Patent and Trademark Office with about 350,000 new grants each year.  IBM alone has over 90k patents.  Including attorney fees, a patent can cost about $50k to register.  No wonder this a booming area of the law.
My colleague and Silicon Valley patent attorney, Dr. Steven Colby, will share why patents are crucial for start-ups and growing companies.
Rule of Thumb
Tell me if you have heard any of these before –
Reserve domains and social media account for your company and products so your online reputation is protected.
Hire people who build stuff on their own time, just for fun.
These are more guidelines than actual rules and will help you understand why patents are so valuable.
The simplest way to value patents is to follow these simple four steps.
Step 1:  Ask yourself three questions –
Is there any direct cash flow associated with your patent?
Or, if you did not have this patent, would your product suffer?
Or, would any other company benefit by having these patents?
If the answer to either of the above questions is yes, then your patent has value.  If the answer is no, then your patent may have minimum or no value.
Step 2:  If you have cash flow directly attributed to this patent, great!  When does your patent expire, i.e. how much time do you have to enjoy this cash flow?
Step 3:  Take the annual cash flow from the patent, and multiply that by the time left on your patent.
Step 4:  The value of your patent is 0.10-0.15x of the value from step 3.
This will give you an approximate value of your patent.  Of course, this is not an absolute number, but it is a good starting point.
In today’s world of advanced technology and brainpower.  Patents are no different than any tangible asset like gold or oil.  They can be created, need protection, and can be monetized.
Paraphrasing Bill Gates – If people understood how patents are granted, when most of today’s ideas were invented and patented them, the industry would be at a complete standstill today.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 30 Blog – https://www.veristrat.com/blog-valuation/whats-a-startup-worth/
They say an entrepreneur is someone who jumps off a cliff and builds a parachute on the way down, hoping it opens in time.
They are the gladiators of the business world. They are the ones who wake up every morning and go to work so they can create jobs for others…
We have seen and heard too many stories of startups and founders, who raise capital, at such and such valuations, and are billionaires overnight. But how does startup funding work? How do venture capitalists or Angel investors know where to invest or how much or at what valuation?
There are 630,000 new businesses formed each year. About 300 of them receive Angel or VC funding, and only 3 of them will go on to become unicorns (companies worth over $1B).
My colleague Jason Gordon, a Silicon Valley attorney who represents venture-backed startups and VCs as they deploy capital, will share what it takes to raise capital in today’s world, so you can be one of the 300, or maybe even one of the top three.
1. VCs have their own investors. They have got maybe pension funds or funds of funds or sovereign wealth funds. Family offices or wealthy individuals that make up their LPS their limited partners.
2. Those investors have a set of expectations that is typically three X the return on their capital over the life of the fund.
3. The strategy that a VC deploys in order to get those returns that are necessary to please their investors.
There will be a lot of companies and investments that do not pan up will be a few singles, but it is the big winners that are going to get the returns you need in order to satisfy the expectations of the VC investors.
Depending on the VC, industry, and stage of the company, there are three ways they value companies –
For Seed or Angel Stage. How much are they looking to raise? Take that number, and divide by 10%, and 25%. VC or Angels will not take less than 10%, and not higher than 25% in equity of an early-stage startup.
This gives you a good range for the valuation of a company and establishes a starting point. For example – the first Bitcoin transaction was for a pizza. Someone accepted 10,000 Bitcoins for a pizza, and the value base was established.
For Series A or Early Stage. How much was your last round’s valuation? Have you 3-4x your customers or revenue since? If yes, they will give you twice that multiple in valuation for your next round.
For example – if you had said you have 10,000 users and your seed valuation was $1M, and now you have 50,000 users, they will at least give you a $10M valuation if not more.
For Growth Stage. What are similar companies in this industry selling for? Say if your competitor just raised capital, what are the terms of that raise, and how does your company’s performance stack against that?
If your competitor just raised $200M at a $10B valuation, how do you stack up against them in terms of stage of development, market traction, and management team?
The most important point here is your first ask. How much are you looking to raise and for how much equity? This always becomes the starting point.
There are three things founders can do to maximize their company’s value –
1. Create a product or service with a pre-existing demand.
2. Recurring revenue.
3. Be a Great Recruiter.
4. Ask and you shall receive – simply ask the VC.
I have been in the venture capital and startup world for over a decade. I have seen many companies go from nothing to Fortune 500, and many going from zero to zero.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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Episode 31 Blog – https://www.veristrat.com/blog-valuation/whats-an-online-education-business-worth/
Cauliflower is nothing but a cabbage with a college education – Mark Twain
Leave it to Twain to eloquently portray what a college degree is worth. Most of us don’t think of education as a business. But it is, and a great one. Schools and universities are the largest landowners, with the biggest buildings…
But there is one business that is even better than traditional education. Online education. Here the business owner is not limited to the number of faculty members or classroom seating capacities. They can scale their revenue just like a technology company while enjoying the consistent cash flow of student tuitions.
Let’s see what an online education business is worth…
There are over 7 million students enrolled in online learning courses, and this industry is projected to be $370 billion by 2026.
Professor of Economics and Dean of Extended Education at Sonoma State University, Dr. Robert Eyler, will show us the latest trends in online education.
So, three trends that are going on an online education right now,
1. One is breadth and depth, and the idea behind that is, is that we are seeing classes that 10 years ago, would have never been imagined would be online going online, including science classes, were trying to do things that are relatively simple.
2. The second is interactivity. So, not only should it be somewhat lecture-based just to kind of get things kicked off, we are seeing a lot more modeling where it’s more conversational, more seminar-style online, and that’s getting closer and closer to having a full university experience in class.
3. The third big trend is trying to connect it back to face to face. One of the biggest issues with respect to COVID-19 is actually having a situation in which you can have some face-to-face. So, a lot of students do not want to have 100% online.
Rule of Thumb.
Education is a business where customers are willing to pay more for prestige while putting in the least effort. It gives recurring revenue and has a low cost to service.
Online education businesses can sell between 5-10x on EBITDA.
There are three things owners can do to maximize the value of their business –
1. 42% of online students have motivational problems. This is the biggest issue with online courses.
2. Partnerships – partner with people who have people.
3. Online everything.
Historically, education was not considered a business. It was carved out as a way for community leaders, or captains of industry to give back.
Now education is one of the best businesses to be in. There is a reason why universities have the largest endowment funds.
But this business is only limited by its brick and mortar barriers which are self-inflicted. Once the barriers are lifted this business grows on recurring revenue. And with the endless supply of job seekers, the demand for learning is limitless. In my opinion, it is the holy grail of businesses to own.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 32 Blog: https://www.veristrat.com/blog-valuation/whats-an-nft-worth/
The world is continuously reinventing new ways of commerce making our lives more and more virtual. Think how folks in the nineties must have felt when they heard the term email or PDF or text messages for the first time.
But today such mediums are a part of our day-to-day lives.  Despite NFTs being alien to us today, they are here to stay.  It will be to our benefit to understand them, especially how they are valued.
Let’s see what an NFT is worth…
NFTs stand for non-fungible tokens. Simply put, they are unique digital assets, which can be traded, and their ownership is recorded on the Etherium blockchain. Similar to the deed to a house being recorded on the blockchain instead of the local County Recorder’s Office.
NFTs are art, music, video, in the form of JPG, MP3s, GIFs, and more. Because they hold value, they can be bought and sold just like other types of art – and like physical art, the value is largely set by supply and demand.
With that basic understanding of NFTs, there are the five factors that determine their value. Think of these factors similar to square footage, location, age, and other parameters that affect the value of a house….
1. Age
2. Creator and community
3. Scarcity
4. Release Pace
5. Richness
Now let’s see how NFT valuations work. There are two ways you can value an NFT…
1. Based on income
2. Sales Comparison
Think of NFTs like domain names. If you were to buy or sell a domain name, how would you value it? Like domain names, when they were originally launched in the nineties, people could not fathom why someone would pay millions for a particular name. But domain names are a household asset now. Most of us own at least one.
Electronic assets are the future. We will of course always need tangible assets like a house or a car or jewelry. But electronic assets require less upkeep than tangible assets.
NFTs have an operating cost called a gas fee, which is the cost of the energy it takes to run the blockchain on which they reside. How our property taxes pay for the county and assessor’s office which maintain our deeds and titles.

If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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Episode 33 blog: https://www.veristrat.com/blog-valuation/whats-a-domain-name-worth/
Buy land, they’re not making it anymore. – Mark Twain.

This logic is applicable to any asset where the supply is limited, and the demand is ever-lasting. In the last quarter of a century, we have seen virtual assets create billionaires, rewarding their foresight to buy and hold online real estate ahead of everyone else.
Oil or gold or timber were the rages in the 1850s. Today NFTs or crypto assets are the coolest kids on the block…
In the 90s, domain names were the open-range land parcels of the internet.
Let’s see what a domain name is worth…
There are over 360 million domain names registered globally with 5 million new domain names added annually. Creating a unique marketplace for traders, investors, and speculators.
There are three things to consider when valuing a domain name.
1. Extension
2. Length and Specificity
3. Relatable
My colleague and SEO expert, Hema Day, will share the latest trends in domain names –
The valuation of a domain name can be very complex. I would urge you to follow these tips:
Definitely do a search for something like GoDaddy if it’s a domain name that you want. It should not really cost you more than eleven dollars or less or a little bit more a year to host a domain name. Now, this week, a client came to me. He is an attorney, and he wanted to buy an additional domain that he felt could benefit his business, and this domain name was valued at $17,000, which is a lot of money for a domain name. How do you decide whether this is worth investing in? Now, firstly, look at it in terms of whether it’s going to yield you any traffic. Traffic from the standpoint of keyword analysis on Google is super important. If it’s not going to give you any traffic, then they don’t get it. The second thing is it associated with a pre-existing website. If so, then take a look at what that website is doing, what kind of traffic it is draining, what kind of leads it’s actually getting, and, last of all, take a look at whether it’s actually going to add value to your bottom line and, by that, I mean lead generation. Quite often, the domain name is associated with a branding strategy and if that does not work, then don’t buy the domain name, and with that I back to you Bharat.
Thanks, Hema. It is great to have you…

There are two ways you can value domain names –
1. Look up what other similar domain names are selling for
2. Use domain name brokers or value estimators including options from GoDaddy or Estibot

These two methods will give you a general idea of what your domain name may be worth.
In the last 25 years, domain names have matured as an asset class. This makes me wonder which assets are budding or peaking as we speak. Of course, crypto-assets come to mind.
Domain names today are like the commercial real estate of the internet. While other emerging virtual assets are parallel to subdivisions under development – they will be worth a lot more in 20-30 years.
The most valuable virtual asset today is the real estate pre-loaded apps occupy on a new iPhone or Android or PC or tablets. I wonder what that real estate is worth…
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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WEBSITE: http://www.veristrat.com
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 34 Blog: https://www.veristrat.com/blog-valuation/whats-a-sports-team-worth/
What’s a Sports Team Worth?
Give them bread and circuses and they will never revolt. – Juvenal
This quote works on so many levels. From the economy to sports, to entertainment. Believe it or not, the Roman gladiator games were just their version of the content. Even today, sports is only worth the content it creates. No less than a reality TV show like Survivor or the Bachelor.
What does it take to buy, run, and sell a trophy asset like a sports team that creates unscripted content? We know it takes a lot of money…but how much?
Let’s see what a sports team is worth…
There are over 150 sports franchises in the five major leagues spread over 52 cities in America. NFL is the most coveted of all the major leagues with revenue of $16B, and the Dallas Cowboys as its most valuable franchise.
My colleague, Mike Shapiro, who has worked with SF Giants, Baltimore Orioles, Atlanta Braves and is President of the Pioneer Baseball League, will walk us thru the latest trends in sports team ownership.
All you Mike…
I want to talk about the sports franchise valuation and acquisition strategies. The marketplace for sports teams is all over the place right now. In large part because at least in baseball the industry has been turned upside down by major league baseball’s decision to change the relationship between the minor league clubs and the major league clubs on the major league level franchises have never been more valuable in fact it is harder and harder to acquire major league clubs because those valuations keep increasing to the extent that there are fewer and fewer buyers available and the entire industry is based on supply and demand at the minor league level.
However, bargains can be found and we are finding that the marketplace is fairly robust folks are seeing that there are good deals to be had in some of the really choice markets that either has been abandoned by MLB in the relegation process or that our newfound leagues as independent leagues and so the buy-in for a minor league team that had been affiliated for example was probably starting in the six to eight million dollar range and as you got up into higher levels, it would go to the 20-30 million dollar range.
Rule of thumb
Tell me if you have heard this before…
What takes days to gain in flexibility, takes weeks in strength, and months in endurance.
What I am about to share is less of a rule and more of a guideline, that will help you estimate the value of your favorite sports team.
Sports teams are worth 2-6x on revenue. Revenue includes ticket sales, merchandise, stadium, media, and national revenue from the league if it’s a franchise.
So next time you want to know what your favorite sports team is worth, just google their revenue, and first multiply by 2 and then by 6. You will get a range of what your favorite team is worth.
The spread between 2-6x depends on four factors –
1. Market
2. Economy
3. Community
4. Tax Benefits
Owning a sports team is like running a Hollywood studio. It’s not for the faint of heart. The unions and regulators watching your every move, the talent is ever demanding and sometimes crazy. The audience is easily distracted. And the owners have a bottomless appetite for profits.
It requires a massive investment upfront, and a willingness to lose money annually. It is a people business and only works well if you have good people, can attract good people, and retain good people. And if and only if, you are able to do these things, you may have a chance to make money when you sell.
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Episode 35 Blog: https://www.veristrat.com/blog-valuation/whats-a-podcast-worth/
Podcasting is the fastest-growing segment in media and entertainment. Its invention has triggered
the decline of the old and stogy gatekeepers who have silenced the common man’s voice for
decades.
Podcasting today is where radio and television were in the 1930s. Despite its exponential rise,
this new form of expression has only scratched the surface.
There are over 1M podcasts and over 100M listeners with 40% of them in America. It is a $14B
market poised to grow to $60 billion by 2025.
Investment banker and host of the popular The Silicon Valley Podcast, Shawn Flynn will walk us
thru the latest trends in this new media segment…
Now there’s a lot happening in the podcast industry. A lot of trends. One of them is that people are
realizing how valuable it is as part of their marketing strategy.
So, a lot of individuals, a lot of companies are allocated time to be guests on podcasts where they say hey. This audience is my target market. With that, companies are allocating part of their marketing budget to partner, to sponsor, to roll out ads, and even be a paid guests on some of
these platforms have a lot of exposure.
Now, what’s really interesting about this is that some of these podcast hosts see that. Wow, there’s a lot of AD money out there. There are a lot of ways to make revenue and actually turn this into a
career, but I can’t do it alone, so they’re partnering with other podcasts. So, maybe now you’ll get 10 podcasts that are gathered in the same sector that have the same target audience, the same demographics, partnering up on one platform.
And that one platform, that one agent will go out and negotiate contracts for those advertising
contracts, paid guess, sponsor products, all of that to be on these other platforms and they share it.
And with that, these platforms for many podcasts are actually acquiring other platforms for many
podcasts and rolling them up.
And guess what? It’s residual income. It’s almost a SAS model. You know the subscribers, you kind of have a guess about marketing. How much is going to come in for each of these podcasts?
You see the growth, you see the metrics. So guess who is starting to get interested in these family
offices and private equity groups?
They want consistent cash flow. They want that hockey stick growth. So a lot is happening right now in the podcast industry.

Rule of Thumb
Tell me if you have heard these before. Two hosts are better than one, but no more than three.
You want to push at least one episode a week to keep your audience engaged. These are more guidelines than rules which will help you build a loyal audience…
Podcasts are valued two ways – if your podcast is monetized then depending on your niche and audience size you can expect 4-7x on revenue. A podcast with an exclusive niche and audience is
more valuable than a mediocre podcast with a vast audience.
If the podcast is not monetized, then the value is based purely on the brand and listener base. You
can expect $2-5 per monthly listener.
There are three ways to maximize the value of your podcast:-
1. Love your tribe
2. Collaborate
3. Be shameless
I love the story of how our late beloved anchor, Larry King got started in radio. Larry said ‘if you
are honest with your audience, you can’t go wrong.’ Honesty is evident. Instinctively we know when someone is being inauthentic because the camera and mic are merciless. If you are real,
your AV equipment will be 10x that quality. If you are inauthentic it will be 10x that too.
Podcasting is the latest land grab in media and entertainment. No longer will you be arrested for running a pirate radio. No longer does someone has to greenlight your show. No longer do you
have to wait for someone to retire to take their time slot.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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Episode 36 Blog: https://www.veristrat.com/blog-valuation/how-a-409a-valuation-works/
Could you predict if a 4-year-old will be successful? Or if a rookie soccer player will play for the national team? Or if a newly married couple will stay together forever?
I can’t. But part of my job is to conclude if a startup will be the next billion-dollar company.
Startups are the seedlings of the business world. They are grown in nurseries called accelerators, or incubators, or angel funds. How would one go about knowing a seedling’s future health, size, or harvest?
What if assessing this seedling’s future was the law? What if people’s livelihoods depended on getting this right? What if done incorrectly, this miscalculation could cost billions to shareholders in IRS penalties?
Let’s see how a 409a valuation works…
Hi – I am Bharat Kanodia. I have signed off on over 900 409a valuations, including Roku, Marketo, and Twitter. I tell founders what their companies are worth.
IRC 409a was implemented in 2005. The IRS wanted to ensure they take their fair share of taxes of the non-cash piece of employee compensation from Silicon Valley companies. However, prior to 2005, companies were giving employees stock options while not being on the hook for paying taxes on them.
I mean, think about it. Startups never have a profit, and they are lucky if they have revenue or a product. Yet, they need to attract customers, investors, and employees. How?
They use a currency called ‘Valuations.’
Startups do not have the traditional metrics valuation experts use for valuing a company. So either we literally makeup numbers, and call it a valuation, or reinvent new formulas to value startups.
Valuation experts, after prolonged deliberation, have created innovative ways of quantifying the values of such startups.
There are three ways to value a startup –
One. Assuming the company has revenue or cash flow metrics, then we use a discounted cash flow method or market approach. The traditional methods of valuations. However, since 98% of startups are not profitable, a revenue-based market approach is most likely to be used.
For example, if a company has $5M in revenue, and comparable companies are selling/trading for 8x on revenue, then the company’s value can be $40M.
Two. A company is worth whatever someone is willing to pay for it. This valuation method is based on the company’s last round of funding. So if someone paid $20M for the last round of funding, so long as that round is within 6 months, we can argue that that valuation is the best benchmark.
Three. If the company does not have revenue or has not raised capital, then valuing it is similar to valuing an art collection from an unknown artist who has never sold anything.
The artist like the founder is unknown without a track record.
The art collection without a following or history of transactions is like the company without revenue or history of capital raise.
So how would one value the art or the company with so many unknowns? Well, there is a way…
It is difficult to collect data of peer startups who work in the same industry, same business model, management team quality, and in the same location.
In such cases, we would show the work to an angel investor who invests in comparable companies to get her input. We also compile data from Pitchbook and other databases to create a virtual market to support our conclusion.
This, however, is only the halfway point. Once we determine the value of the entire company, we allocate that value into different classes of stock since they have varied terms and ownership rights. Just as crude oil is refined into different products to cater to different demands.
Frankly, determining the company value is relatively straightforward compared to the allocation of value into different classes of stock. A wise valuator knows that the allocation is the Achilles heel in a 409a valuation.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat Kanodia has appraised over 2000 businesses and signed off on assets worth $2.6 trillion in value. He has appraised unique assets like the Golden Gate Bridge, Atlanta Airport, Uber, Airbnb, Yahoo!, Brooklyn Bridge, Mirage Casino LV, among many others. Bharat is the Founder of Veristrat, a company that helps startup founders and VCs by telling them what their companies are worth. He lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.

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Episode 37 Blog: https://www.veristrat.com/blog-valuation/whats-the-eiffel-tower-worth/
Let’s have some fun today. I have been fortunate to have valued some of the most unique assets in the world, including the Brooklyn Bridge, Atlanta Airport, the Aleyaskan Pipeline, and the State of Hawaii.
In this video, I will walk you thru my thought process of how I approach valuations of unique assets – when there are no market comps or databases you can refer to.
Most of us think that the only time one needs a valuation is for a deal or a transaction, but valuations can be needed for accounting, taxes, and insurance.
The Eiffel Tower of Paris.
Let’s get the basics of the monument down first. Built in 1889, it is a 1000 foot tall monument in the heart of Paris, which now attracts 7 million tourists annually, and is used for broadcasting communications. It is made of lattice-shaped wrought iron with 20,000 lights.
The Eiffel Tower was built for $1.5M in 1889. If we inflation adjusts this original cost using CPI, we get $44M.
According to a 2012 study by the Chamber of Commerce of Monza and Brianza in northern Italy, it is worth $510 billion.
In 2011, the TV show Pricing the Priceless on the National Geographic Channel speculated that it would cost US$480 million to rebuild it.
So which is it? $44M, or $480M, or $510B, or something else?
An asset like the Eiffel Tower would never be purchased or sold.
The only real reason anyone would need to value the Eiffel Tower is the cost to rebuild it, in case it were to get damaged or destroyed in an accident or an act of God.
Hence, the two traditional methods of valuation, income and market approach are not suitable.
If the French Government would have to rebuild this iconic monument, they would only need to consider the cost of replacing it with a monument with similar features and functions.
The land on which it is situated, probably one of the most valuable land parcels in Europe which alone could be worth billions is irrelevant since even in an accident no real damage would be done to the land.
Hence, if the French had to rebuild Europe’s most iconic monument – they would first need to plan and design the structure, prep the land, acquire the materials, organize the labor and equipment, and execute seamlessly again how they did in 1887.
Assuming this is doable, now let’s go back and consider the three data points we have of its worth.
1. $44M – the inflation-adjusted number – that is too low. I think it would cost them that much just to get permits and design.
2. $510B – this number is the overall economic benefit value of the monument to Paris and the French economy. It would even include things like the incremental revenue a hotel or restaurant could charge for an Eiffel Tower view suite or table. That is not the task at hand here.
3. $480M – the 2011 pricing claim is 10 years dated. And I am not quite sure what exactly is included in that number.
If the construction of the Eiffel Tower was taken on as a project today, I would estimate it to cost between $2-$2.5 billion to rebuild. Not including the cost of land.
This cost is broken down per the following components –
• Design, Planning, and Permits – $50M
• Sitework and Foundation – $100M
• Materials – $600M
• Labor – $700M
• Equipment and Transport – $200M
• Insurance and Administration – $150M
• Miscellaneous and Incidentals – $200M
Winston Churchill once said – we shape our buildings; thereafter they shape us.
Monuments like the Eiffel Tower, are made of steel, labor, and ingenuity. But once we the people who live and breathe around accept them as part of the landscape that is when such monuments start to shape our lives and become legendary.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat Kanodia has appraised over 2000 businesses and signed off on assets worth $2.6 trillion in value. He has appraised unique assets like the Golden Gate Bridge, Atlanta Airport, Uber, Airbnb, Yahoo!, Brooklyn Bridge, Mirage Casino LV, among many others. Bharat is the Founder of Veristrat, a company that helps startup founders and VCs by telling them what their companies are worth. He lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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Episode 38 Blog: https://www.veristrat.com/blog-valuation/whats-a-franchise-worth/
90% of businesses fail in the first five years. When I hear this statistic, what jumps at me is that 10% of the businesses succeed. So, naturally, I want to know why?
What do the 10% of the businesses that survive do, or do differently that they make it? What is their secret?
The number one reason for business failure is owner’s mistakes or misjudgment. If only there was a coach or a partner who can share their first-hand experience, someone who has a vested interest in their growth, and someone who is willing to go the extra mile and ensure your success. Such angels are sometimes called franchisors.
Let’s see what a franchise is worth…
About 5% of businesses in America are franchises, contributing 3% to US GDP, and employing 9 million people.
There are three latest trends in the franchise industry –
1. Millennials and Baby Boomers
2. Digital Marketing
3. Eye in the Sky
Nothing tops physical presence, but remote monitoring is a very close second.
Rule of Thumb
Some franchises are valued as a multiple of EBITDA. Some as a percentage of sales. Some as regular businesses. But if you compare a franchise business to a non-franchise business, as a rule of thumb.
Franchises are worth 10-20% higher than a comparable business that is non-franchise. For example, if there is a sandwich shop that is valued at $500k, the same sandwich shop if were a Subway would be worth $550-600k. Why? Because franchises transfer goodwill from the old owner to the new owner seamlessly. The customers almost never experience a drop-in service or quality.
There are three ways to maximize the value of your franchise –
1. Relationship with Franchisor
2. Community Outreach
3. Grow Your Tribe
The franchise concept is as American as apple pie and is a failsafe recipe for a successful business so long as you are willing to follow the trail of breadcrumbs laid out for you. When the British East India Company set sail, were they not just a franchise arm of the old Empire?
When McDonald’s set up shop in Malaysia it brought a piece of Americana with it and paved the way for American companies to expand in Asia. When Marriott expanded into Europe it opened a new avenue for European real estate investors. Homogeneity is good when it comes to business operations, managing customer expectations, and creating a legacy.
To me, franchising is the beacon of globalization.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat Kanodia has appraised over 2000 businesses and signed off on assets worth $2.6 trillion in value. He has appraised unique assets like the Golden Gate Bridge, Atlanta Airport, Uber, Airbnb, Yahoo!, Brooklyn Bridge, Mirage Casino LV, among many others. Bharat is the Founder of Veristrat, a company that helps startup founders and VCs by telling them what their companies are worth. He lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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WEBSITE: http://www.veristrat.com
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 39 Blog: https://www.veristrat.com/blog-valuation/whats-pre-ipo-worth/
A friend of mine works for Rivian. I asked if he has thoughts on their expected IPO valuation of $80 billion.
He said – you know we have not delivered one car yet? Not one. But we are asking for a valuation that is more than GM, a company that sells 7 million cars a year. If the markets want to give us $80 billion, we aren’t going to say no. I already have my boat picked out.”
Like banks, public companies create money using valuations.
The traditional path billions are either to inherit, or marry up, or win the lottery.
Now the path to fulfilling that American dream is to start a company, raise venture capital, and keep raising capital until you IPO for billions.
Let’s follow this journey from start to finish…
Venture capitalists are not looking to invest in companies and run them into perpetuity. Their business model is to invest in numerous companies, double down on companies that do well, and sell them for a big payday. The only way this model works is when their portfolio companies are successful in raising capital at higher and higher valuations.
Say you start a company, and are among the 2% of startups that successfully raise capital.
You raise $2M Series A at a $10M valuation.
That $2M will burn within months and you will have to raise capital again. But next time you will need to justify at least a $20 million valuation to retain investors’ interest.
After 4-5 times successfully raising capital and increasing valuation 3-5 times at each raise, you are now valued at $1 billion. Such companies are called unicorns and can be candidates for IPO.
Private company investors are incentivized to push valuations higher at each funding round to show appreciation of their assets under management. And since private companies’ investments are outside the purview of regulators, investors have free reign on valuations.
I have valued WeWork for one of its VC investors, who was very bullish on the company and insisted that the value of the company was 60% higher than what I concluded. I made a comment that WeWork’s business model is the same as Regus Space? My client did not like my comment. Six months later valuation of WeWork dropped from $47 billion to $12 billion, and investors had to take a 70% haircut. Today WeWork is worth about $9 billion. 80% lower than the original $47 billion.
The disconnect happens when the company IPOs and all the traditional methods of valuation (income, market, and cost) come into play. As a valuation expert, if I were to value a pre-IPO company like Rivian, or WeWork, or Uber, I cannot justify their valuation using traditional methods.
The fact is pre-IPO valuations are inflated because of two reasons –
1. Private companies’ investments are unregulated.
2. Private investors use non-traditional valuation methods highlighting the potential growth of the company because they are motivated to maximize their investments.
If you can convince investors and markets that your company will show exponential growth, they will give you a valuation that may touch ten digits. By highlighting the growth story of your company, you are almost legally printing money.
So next time when you are enticed to invest in an IPO – ask yourself two questions –
1. How much of their valuation is based on future growth?
2. How does a competitor’s valuation stack against them?
A Hollywood set is built by creative and ambitious people. It is temporary and designed for a specific purpose. It is a two-dimensional object in a three-dimensional world. Just like a pre-IPO valuation…
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat Kanodia has appraised over 2000 businesses and signed off on assets worth $2.6 trillion in value. He has appraised unique assets like the Golden Gate Bridge, Atlanta Airport, Uber, Airbnb, Yahoo!, Brooklyn Bridge, Mirage Casino LV, among many others. Bharat is the Founder of Veristrat, a company that helps startup founders and VCs by telling them what their companies are worth. He lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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WEBSITE: http://www.veristrat.com
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 40 Blog: https://www.veristrat.com/blog-valuation/whats-the-golden-gate-bridge-worth/
If you are buying a car you can go to Kelly Blue Book to consult pricing…
If you are buying a house you could go to Zillow to look up home values…
Where can you go if you are assessing a one-of-a-kind behemoth?
There is an icon that has withstood the test of time for almost a century. It is an engineering muse representing the new American west…
Let’s see what the Golden Gate Bridge is worth…
I have appraised the Golden Gate Bridge in a former life. Today I will share with you my process on how I go about valuing an iconic monument…
Let’s get the basics down first…
The total length of the bridge is 9000 feet or 1.7 miles. The span is about 4200 feet and the deck is 90 feet wide. It is 220 feet above the water and serves over 100,000 commuters between San Francisco and Marin and North Bay Counties daily.
It was part of President Franklin Roosevelt’s New Deal promise for a better America during the Great Depression…
Construction took five years and was completed in 1937 for then staggering cost of $35M. If we inflation adjust that to today’s value using Consumer Price Index, we get $670M. The Golden Gate Bridge attracts more than ten million visitors annually. Visitors translate into revenue and revenue translates to value.
Its annual revenue is $145M. The Golden Gate Bridge District spends $85M in annual maintenance, turning a healthy profit of $60M.
Where else can you make a profit of $60M a year?
To make $60M in dividends, we will have to buy almost $800M worth of ATT stock. Or a commercial building like the Salesforce Tower worth $1.2 billion. Or we have to buy $1.5 billion worth of 30 years government bonds.
If you had that kind of money, would you buy ATT, or bonds, or an office tower, or the Golden Gate Bridge?
I estimate as a business, the Golden Gate Bridge is worth $1-1.5 billion.
Another way to consider the bridge’s value is to compare it to other bridges around the world. The problem is the cost of massive construction projects is dependent on local topography, geopolitics, and macroeconomics.
The most relevant comparison to the Golden Gate Bridge would be the east span of the Bay Bridge which is only four miles away. It cost $6.4 billion in 2013 to replace 2.2 miles. In today’s dollars that comes to $9 billion.
I think it would cost $10 billion to rebuild the Golden Gate Bridge.
The breakdown is –
• Design, Planning, and Permits – $200M
• Sitework and Foundation – $2B
• Materials – $2B
• Labor – $3B
• Equipment and Transport – $1.5B
• Insurance and Administration – $1B
• Miscellaneous and Incidentals – $300M
The people who would rebuild the Golden Gate Bridge are no less than frontline soldiers. They would be working in the icy and corrosive saltwater of the Pacific, with death-defying currents below, under hurricane-force winds, and dense fog. And given today’s political, social, and environmental climate, we would attempt to replicate the essence of the original Golden Gate Bridge while using the latest designs and materials. All factors add to its mystique and unforgiving conditions.
Great monuments like the Empire State Building, or The Great Wall of China, or Saint Peter’s Basilica are both functional and symbolic. The Golden Gate Bridge is the artery of America’s west coast, and a symbol of the beginning and the end of a journey.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat Kanodia has appraised over 2000 businesses and signed off on assets worth $2.6 trillion in value. He has appraised unique assets like the Golden Gate Bridge, Atlanta Airport, Uber, Airbnb, Yahoo!, Brooklyn Bridge, Mirage Casino LV, among many others. Bharat is the Founder of Veristrat, a company that helps startup founders and VCs by telling them what their companies are worth. He lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
DON’T FORGET TO FOLLOW:
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LINKEDIN: https://www.linkedin.com/company/veristrat-inc./

Episode 41 Blog: https://www.veristrat.com/blog-valuation/why-tax-the-rich/
When an asset is liquid and publicly traded, we know its value minute by minute.
When an asset is sold, we know its value as of the transaction date, because someone wrote a check to buy it.
How would you value an asset that is not publicly traded, or transacted, but needs a valuation?
Lately, there have been talks by Janet Yellen and the Administration of taxing the rich and having them pay for the $6T deficit caused by the pandemic.
Let’s break down this proposed tax legislation piece by piece, and then see the forest for the trees.
1. This new proposal would only apply to people with a net worth greater than $1 billion, or whose income is over $100M annually for three years. Affecting only 700 Americans out of 330 million.
2. It would collect $200 billion in tax revenue over 10 years or $20 billion a year. The annual tax collected by the US government is $3.3 trillion.
3. Tax will apply on liquid assets that appreciate in value, including stocks, bonds, real estate, bullion, crypto, and art. Generally, capital gains apply to the appreciated portion of sold assets. However, this law would levy taxes on unrealized gains. For example – if someone purchased $200 of Bitcoin, which is now worth $100 million, even if they have not sold any Bitcoin they will be asked to pay capital gain tax on the difference between $100 million and $200. Taxing paper profits.
Here is why this new law makes sense –
1. The 700 richest Americans avoid taxes by using a strategy of buy, borrow, and die. They buy an asset, it appreciates in value, they take a loan against it, get tax write-offs on the loans, and when they die their descendants inherit the wealth without paying any capital gains on the appreciated value.
2. US citizens are supporting the growth in valuations of public corporations by buying their goods and services. Why should the government not tax the owners of such corporations for the increased wealth that is built on the backs of Americans?
3. The government needs the money. They can’t tax the middle-class or the poor any more than they already have, and the top 0.0002% have enough to share the spoils. What is wrong with asking them to pay more?
Counter-arguments against the tax legislation –
1. This proposed legislation creates $200B in taxes over 10 years which is only 3% of the $6 trillion deficit caused by the pandemic. Why do it at all?
2. Give an inch they take a mile. This tax will eventually be applicable to everyone. How income tax was temporarily levied in 1862 for the first time to pay for the civil war and affected only 10% of the population. Income tax became permanent in 1914 starting out at 1% and designed only to tax millionaires. And we all know how over the last hundred years, taxes collectively grew to over 50% including federal, state, sales, property, capital gains.
3. Valuation is a moving target. Say Tesla stock trades at $1000 a share, and Elon decides to sell 5% of his stake in Tesla. Do you think Tesla will continue to trade at $1000 per share? No. The market will panic at the slight mention of Elon cashing out. This creates a valuation problem.
The top 700 for whom this law is originally designed will do three things to avoid paying Uncle Sam.
1. Use their ammunition against them. They will use tax loopholes including creating trusts and foundations or charities – to transfer wealth to families and enjoy tax deductions.
2. Become an expat. Tax havens like Puerto Rico protect against US capital gain tax. Or take citizenship in Malta, or Luxembourg, or St. Kitts.
3. Don’t IPO. There are other ways to raise capital or hide assets. Go public outside the US. Create special ownership structures using private shell companies.
Between you and I…all this legislation is great for my business because it will mandate an annual valuation for every soul in America. Creating an exponential demand for my services.

If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat Kanodia has appraised over 2000 businesses and signed off on assets worth $2.6 trillion in value. He has appraised unique assets like the Golden Gate Bridge, Atlanta Airport, Uber, Airbnb, Yahoo!, Brooklyn Bridge, Mirage Casino LV, among many others. Bharat is the Founder of Veristrat, a company that helps startup founders and VCs by telling them what their companies are worth. He lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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Our Founder and Chief Appraiser, Bharat Kanodia, was interviewed by Sanaz Tahernia of KRON4 on KRON ON, a Bay are TV channel to discuss ‘why valuation matter to startups?’
To learn the most insightful stories about Startups, visit Sanaz Tahernia’s channel – https://www.youtube.com/c/SanazTahernia/videos.
If you like what you heard, be sure to subscribe!
If there is a topic that is of interest to you please comment below and I will do my best to give you the latest and greatest on it.
– Bharat Kanodia, ASA
Bharat has valued over 2000 businesses, real estate, industrial, and financial assets including governmental infrastructure, public and private companies, and various unique real estate assets. He has signed off on over 4,500 valuations with $2.6 trillion in assets globally. Bharat lives in the San Francisco Bay area with his family and enjoys sailing, golfing, skiing, and horseback riding.
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