Business Network International
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Published in U.S. 1 Newspaper on July 7, 2000. All rights reserved.
Valuing Your Company: Robert Chalfin
E-mail: MelindaSherwood@princetoninfo.com
Whether your company sells for what it’s worth has a
lot to do with who the buyer is, says Robert Chalfin, CEO of
the Chalfin Group, a consulting company in Metuchen (732-321-1099)
that specializes in valuing information technology (IT) businesses.
“Many times the business owners don’t realize how valuable their
businesses are,” he says. “If their business were bought by
a larger company with a well-developed sales force, marketing department,
and other product services, the demand for their services could increase
far beyond what they ever envisioned.”
Chalfin speaks on “Valuing Your Company,” on Tuesday, July
11, at 5 p.m. at the New Jersey Technology Council at Comsys in Somerset.
Cost: $70. Call 856-787-9700.
A professor in Wharton’s entrepreneurial management department for
10 years, Chalfin graduated from Wharton with a BS and MS in accounting,
Class of 1978, and launched his own consulting firm in 1992.
Determining the value of a small business can be a tricky matter,
depending on the type of company, but consultants like Chalfin do
rely on some basic financial formulas, several of which are listed
on Chalfin’s company website, www.chalfin.com.
Special circumstances — the timing and the intent of the buyer
— can put formulas to waste, however. “A timed market is an
important advantage,” says Chalfin. “You always want to sell
when the curves are all pointing up.”
The price tag of a business is in many ways controlled by the buyer.
There are three groups of buyers, says Chalfin: the bottom trollers,
“the people who want to buy the business for pennies on the dollar,”
the financial people who value it on what it’s currently doing and
want a return on investment, and the “synergistic or strategic
buyer” who says “if we combine your product with my sales
force and your customers list with my products, the income and revenues
increase exponentially.”
Chalfin’s advice for people trying to value their business:
Always seek the strategic buyer.Start working on an exit plan as soon as you get intothe business. “Don’t get into something unless you’re going tostart planning how you’ll get out,” says Chalfin, “but runit as if it would not be sold. Typically then buyers come knockingat your door.”Consider all the options. Are you going to get paid instock or cash? Now or over time? Fixed price or based on future performance?How long will the owner have to remain at the business? What willthe owner’s role be after the sale? Will certain key employees remainin the business?Don’t hold on too long. “Many people wait until they’rephysically unable to run the company,” says Chalfin. “Theydon’t realize their own limitations.”Today, people often decide to sell their business for lifestylereasons, rather than lifecycle reasons, says Chalfin. “Twentyor thirty years ago, people sold a company because they reached retirementage,” he says. “Now it’s because they want to try somethingnew.”Also, sometimes business owners are afraid to grow the company tothe next level. “Many business owners are afraid of having theirbusinesses grow, despite the fact that they say we want to,” saysChalfin. “It is a tremendous obligation to own a own business.I know. Everyday when I walk through the parking lot and see all thecars there, I think: I’m responsible for those people.”— MelindaSherwoodTop Of PageBusiness Network InternationalA good networker can tell a story, says Zack Warringer,head of the Princeton Area chapter of Business Network International,the networking organization with more than 1,667 chapters worldwide.”I think people like to promote themselves and their businessbut they use a lot of jargon that people don’t understand,” hesays. “If you tell a story, people are going to hang on and understandyou. Through the story you can talk about you, your company, and whatyou’re able to do.”Founded in 1985 in California by Ivan Misner, called the “networkingguru” by Entrepreneur magazine, BNI claims to have over 24,000members and to have exchanged referrals worth more than $484 million.The Princeton chapter of BNI meets every Thursday morning at Cafe600 at 600 Alexander Road. The next meeting is Thursday, July 6, at7 a.m. Annual membership fees are $240. Call Warringer at 609-919-2340.Referrals are not forced, but at each week’s meetings referrals arepassed. After introductions, one BNI member will typically give aspeech on his or her profession.BNI allows only one person per profession in each chapter, and itcurrently needs a residential realtor, travel agent, landscaper, architect,and job placement professional. The following BNI members representseveral other professions: Mike Benevenia, a printer from HatterasPress; Mary Ann Costabile, property and casualty insurance,Rue Insurance; Christopher De Grezia, real estate attorney,Drinker, Biddle and Shanley; Patricia De Risi of EPIX, a professionalemployer organization; Barbara Fascetta, personal effectivenesscoach, Coaching Advantage; Lee Hessberger CPA, Manuel S. NewmanCompany; Mary Anne Kochut, consulting, Leadership Possibilities;Jessica Lane, payroll services, Paychex; Michael Leo,chiropractor; Bruce Lorenz, photographer, Image Maker; GenevieveNecerato, copier sales, Mariner Business Solutions; DarnellaParker, gift baskets, Treasures from the Heart; Jeff Pierson,commercial realtor, Weidel Realtors; Joan Pollock, computersales, Handtech.com; John Reilly, Life and Health Insurance,Ford Financial; James Scott, technology consultant, ScarlettSystems; Stan Sobieski, home mortgage consultant, Wells Fargo;Patricia Williams, cosmetics, Mary Kay; Irv Wischik, commercialbanker, First Constitution; and finally, Warringer, a financial advisorat Paine Webber.A native of eastern New York, Warringer earned a BS in business managementfrom SUNY New Paltz, Class of 1998, and currently lives in South Brunswick.After attending several Middlesex Chamber events, he decided to formthe Princeton area chapter of BNI. “It’s been one of the mostsuccessful of the BNI chapters because of the tremendous number ofreferrals passed and the number of visitors,” says Warringer.But it’s not all business. BNI also arranges activities outside ofthe weekly networking meeting and recently held a golf outing.Top Of PageMerrill LynchMerrill Lynch is protesting two Hopewell Township ordinancesintroduced in May that would change zoning on its 440-acre ScotchRoad property. The ordinance would change property currently zonedfor two-acre lots to a new category, called “Valley Agriculture,”with four-acre lots. Merrill Lynch is using this property now as farmlandbut claims that doubling the size of house lots would deter developmentbut would not prevent sprawl.Public comment on the ordinance is scheduled for Thursday, July 6,at 7 p.m. in the Hopewell Valley Central High School auditorium. Call609-737-0605.The Merrill Lynch property in question is bounded by I-95 and ScotchRoad. Across the street from it is the other half of the Merrill Lynchholdings, 425 acres, on which are being built 3.5 million square feetof office space for 6,400 employees (U.S. 1, April 12).Another proposed change — which would not materially affect MerrillLynch’s property — would create another new category, MountainPreservation by upgrading three-acre lots to six-acre lots. Also proposedis eliminating any Industrial Office Park (IOP) zones in HopewellTownship and changing them to regular Office Parks.The township says the acreage changes agree with the master plan goalof preventing sprawl, and that elimination of the industrial zonewill help prevent the roads from being overloaded.Merrill Lynch, through its attorney Chris Baker, says it hasinvested $11 million in road improvements around its site. Baker predictsthe new rules could cause burdensome development. “We felt itimperative to get on the record our feelings that downzoning our westside property may not be in the best interests of our firm nor inthe best interests of the community,” says Joe Cohen, spokespersonfor Merrill Lynch.Top Of PageBuilding WorkshopsNew Jersey Housing and Mortgage Finance Agency is offeringfree training workshops for developers and nonprofit sponsors submittingapplications to the Urban Home Ownership Recovery Program (UHORP)on Thursday, July 6, or Wednesday, July 26, from 9:30 a.m. to noonat the HMFA headquarters located on Dye Street in Trenton. The deadlinefor submitting applications is August 17; call 609-278-7617 to getone. To register for the workshop call Joyce Kaminski at 609-278-7550or Deborah Dashefsky at 609-278-7566.The UHORP program encourages mixed-income development by financingthe construction loans for new for-sale homes in urban areas. Privatecommercial lenders are helping to provide this construction financing,and a special fund is also providing $5 million in subsidy funds tohome buyers. In four years, HMFA has partnered with 16 private lendersto provide a total of $164 million in construction financing and subsidyfunds. In Trenton, 19 townhomes were built in Clinton Park for a developmentcost of $1,820,250.HMFA operates programs to rehabilitate, construct, and finance affordablehousing. Its funding and operating expenses come from the sale oftaxable and non-taxable bonds to private sector investors (www.state.nj.us/dcs/hmfa/).”HMFA is proud to be involved in bringing home ownership opportunitiesback to our urban neighborhoods,” says Deborah De Santis,executive director.Below market-rate permanent loans with little or no money down arealso available. For information on HMFA consumer mortgage programscall 800-NJ-HOUSE.Next StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
