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JASON LEROY
leroy @ doeren . com
Q What are the potential effects COVID-19 may have on the value of my business if I sell in the next year ? With the extent of the longterm impact of COVID-19 still largely unknown at this point , the valuation process has had to evolve to reflect the new economic realities it has brought upon us .
Q I suspect an employee may be embezzling money from my business . What should I do to confirm my suspicions ? |
Occupational fraud poses a threat to hundreds of organizations each year , but the recent economic crisis spurred by COVID-19 has provided prime conditions for employees to commit fraud . Historically speaking , there are a number of reasons fraud proliferates during recessions and times of uncertainty . A large factor is the increased financial pressures and opportunity .
If you believe an employee is embezzling from you , take a look at the facts . Start documenting unusual behavior
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Valuations by nature are based on projections and estimates , of which future expected earnings and cash flow play key performing roles . Today many valuators rely on the popular discounted cash-flow method to capture the expected temporary nature of this crisis and assess the value of a business accurately . This method allows special considerations to be given to COVID-19 risk factors impacting the company , industry disruption or growth , cash flow , capitalization rates and much more .
It is important to keep in mind that when valuing any business , it is largely focused on measuring the future economic benefit to an investor . The impact COVID-19 will have on fair
and discrepancies you find . Avoid confronting the employee without hard evidence and the guidance from your legal counsel .
In some instances , it might be best to hire a forensic accountant . They can help trace the trail of fraudulent activity back to its source and uncover the true magnitude of the crime . A good forensic accountant can also help you set up your financial and accounting processes to avoid future fraud exposure .
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market values is not going to be the same for all businesses . Some businesses ’ values will drop significantly , at least temporarily , while others will maintain at their pre-COVID-19 value . |
Before you go putting your business on the market , make sure you have a preliminary valuation of your business performed so you can be sure it ’ s the right time to sell to meet your financial goals and objectives .
knapp @ doeren . com
BRUCE KNAPP
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valuation & forensics edition |