What FRANdata Thinks

Valuing Franchises Post COVID

June 17th, 2021 by Melinda Modica

By Steve Mize of GCF Valuation

One year later, and the small business acquisition market has changed significantly. COVID has created some complexities in small business valuation. For most, values have declined post COVID primarily due to lower revenues/cash flow.

Two Questions to keep in mind:
  1. Has COVID impacted your business (positively or negatively), and if so:
  2. Have revenues/cash flow returned to normal?

In order to help understand how these questions impact valuing small businesses Steve Mize from GCF Valuations walks through the basic valuation methodology and 2 scenarios to consider – one where a franchise unit has returned to normal and another where the franchise did not.

What does this mean for franchisors?

​​​​​One of the biggest challenges that franchisors face (although this depends on the industry) is that some zees may overvalue themselves, while in other cases valuations are booming and it may be a highly appealing time to sell a franchise. Keeping up with the pulse of valuations is very important for franchisors, having this knowledge is a valuable tool used to educate franchisees so the right expectations are being set.

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About Steve Mize

A trusted FRANdata valuation partner; Steve Mize is the founder and Partner at GCF Valuation, the nation’s leading provider of SBA-compliant valuations.  Over the years, Steve has accumulated broad experience in the valuation field, including fairness opinions, mergers and acquisitions, feasibility analyses, strategic planning, and providing expert witness testimony. Additionally, in response to market needs, Steve pioneered small business solutions like BankerValuation, Peercomps, and FinVal, further improving his client’s ability to deliver accurate assessments.

About GCF Valuation

GCF Valuation is the leading provider of SBA-compliant business valuations and appraisals. Unlike many of our competitors, we don’t automate or shortcut the process. Instead, we put a team of fully accredited experts on every project. As a result, we deliver some of the most thorough appraisals in the business—valuations that will stand up to tough scrutiny. Click here for more information.

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