Monthly Archives: June 2015

Identity Theft … IT’S TOO EASY!

Identity theft is an epidemic.  It’s the number one reported complaint of the Federal Trade Commission.  They say that every minute, 19 people fall victim to identity theft and it is the fastest growing crime in the United States today.  Most of us are familiar with the usual ways to protect our identity, such as not giving out your Social Security number, protecting online financial accounts with anti-virus software and effective passwords.  What you may not realize, though, is that your identity can be stolen in some places you’d least expect:

  • Car loan applications – this paperwork is easily obtained by thieves from a salesperson’s desk or trash
  • Pharmacy – they have all your information sometimes including your social security number
  • Doctor’s office or hospital – think of how many people have access to your medical files with all your personal data and medical history
  • Phishing – you open up bogus emails that link you to fake websites where you log in and they steal your username and password
  • Skimming – a small device is put over an ATM slot that reads information from the magnetic strip on your card
  • Garbage and mailbox – thieves go through your garbage and mailbox looking for bills or other papers with personal information on it
  • Data breaches – thieves hack into computer systems of merchants, banks, insurance companies and gaming sites that store all of your personal data
  • Smartphones – while you’re standing at an ATM or store check-out, someone behind you records everything you do; including you typing in your PIN, by taking a video with their smartphone
  • Social Media (Facebook, Instagram, etc.) – as you update family and friends with your daily whereabouts, or show off your vacation pictures, criminals can lurk online seeing that you are away, or learn your daily schedule and stage a break-in and steal your personal information

Keeping thieves from obtaining your personal information is harder and more important than ever, with more and more incidences of identity theft reported each year.  Always use caution when discarding documents, sharing information online, posting too much personal information on social media, or  sharing your sensitive information with a person, business, or even a doctor’s office.

-Scott Goldstein, CPA, Partner

Valuing a Business – Using a Multiple Can Miss by a Mile

Earlier in my career, whenever the fair market value of a client’s business was discussed or needed for a potential sale, a multiple of EBITDA or revenue was the easy go-to approach used.  Sometimes a multiple of 2 was chosen, sometimes 3 or, on rare occasion, a multiple of 4.  At the time, although it seemed so arbitrary which method should be used and what factor should be applied, I was in no position to question what I was being instructed to do.  Over the years, valuation theory and practice developed and slowly replaced this arbitrary, back-of-the-napkin approach.  Fast forward to today, to a time when so many accepted and tested approaches to determining fair market value have been endorsed as applicable in any given situation, it’s clear that the old quick and dirty approach of using a multiple probably missed the real value of a business by a mile.

Through the education and experience I have gained, pinpointing which approach to valuing a business should be utilized is now much less of a subjective art and more risk-based than ever before.  Don’t get me wrong!  Using a multiple can still be a way to check against the results of much more detailed and industry specific calculations.  In fact, the valuation profession suggests considering these so called sanity checks, aka Rules of Thumb, but usually only as a reasonableness check.  Now, published formulas and methodologies exist that help remove some of the guesswork of determining which approach likely fits best given a particular fact pattern.  With so much more information available at the valuation professional’s fingertips than ever before, don’t leave substantial value on the table by taking a shortcut approach to determining what your business is worth!

Feel free to contact me if you have a question about your business or the need to understand its value.

-Steven Fultonberg, CPA, CGMA, CVA, Partner