What’s it Worth? A Guide to Valuing a Small Business
Karr, Frederic H
WHAT’S IT WORTH? A GUIDE TO VALUING A SMALL BUSINESS by Lloyd R. Manning (Oasis Press/PSI Research, 2000, 293 pages, $22.95, paperback)
Reviewed by Frederic H. Karr
I am not an academic. I’m a country appraiser who learned my skills from the school of hard knocks and the university of experience.” So writes Lloyd R. Manning in these folksy opening words to his very helpful manual, What’s It Worth? A Guide to Valuing a Small Business.
The text is heavy and slow, ponderous reading. However, that’s because the subject matters of the various chapters do not lend themselves to either breezy perusal or tripping the light fantastic.
Since this work is admittedly (by the author) a “manual,” it is not intended as light reading to be straight through. (At one point, Mr. Manning also terms What’s It Worth as a “textbook.”) In this regard, since the book is a well-researched manual, it succeeds admirably.
What’s It Worth? deals with several different types of small businesses. While restaurants (both traditional and, especially, fast-food) seem to dominate the text, other types of businesses include various types of franchises, convenience stores, service stations, and motels.
The book is laden with tables, charts, graphs, and formulae (equations). Margin notes are prevalent; important parts of the text of What’s It Worth? are lifted verbatim and then printed in the adjoining margin. These margin notes make for easy reference to important sections of the text. Then, lined blank pages for the reader’s handwritten notes are located at the end of each chapter.
Mr. Manning himself states a change of posture in mid-book. “From this point forward, except for the last three chapters, a flip– flop procedure will be employed. First, I will introduce the theory and why it should be done, detail the methodology, then apply it to the model, step by step.” By and large, this procedure succeeds well.
In spite of the perhaps stodginess of the work’s overall subject matter, instances of levity do pop up in What’s It Worth? For example, in the chapter dealing with valuing a franchise, the author sets forth the “SWAG” method-“Scientific Wild-Assed Guess.” After noting that this method is probably the most common for valuing a franchise, Mr. Manning adds that “most times, though, its more wild-assed than scientific.”
Then, in the chapter entitled “Interpreting Financial Statements,” the author relates that in one particular, the owner kept three sets of books. “The business was always for sale, and so there was a set always ready for a potential sucker-cops, I mean buyer.”
Writes Mr. Manning, “So if you bought this book to learn to do a leveraged buyout of General Motors, you have made a poor choice. But both the publisher and I thank you.”
However, the reader has made a wise choice if he or she is contemplating valuing a small business in preparation for buying or selling. Finally, I hope that both the author and the publisher will thank me for giving What’s It Worth? a favorable review
Frederic H. Karr is a member of the District of Columbia bar and a retired federal government attorney.
Copyright Commercial Law League of America May/Jun 2000
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