Business Network International

Merrill Lynch

Building Workshops

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Published in U.S. 1 Newspaper on July 7, 2000. All rights reserved.

Valuing Your Company: Robert Chalfin


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,

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 into

the business. "Don’t get into something unless you’re going to

start planning how you’ll get out," says Chalfin, "but run

it as if it would not be sold. Typically then buyers come knocking

at your door."

Consider all the options. Are you going to get paid in

stock 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 will

the owner’s role be after the sale? Will certain key employees remain

in the business?

Don’t hold on too long. "Many people wait until they’re

physically unable to run the company," says Chalfin. "They

don’t realize their own limitations."

Today, people often decide to sell their business for lifestyle

reasons, rather than lifecycle reasons, says Chalfin. "Twenty

or thirty years ago, people sold a company because they reached retirement

age," he says. "Now it’s because they want to try something


Also, sometimes business owners are afraid to grow the company to

the next level. "Many business owners are afraid of having their

businesses grow, despite the fact that they say we want to," says

Chalfin. "It is a tremendous obligation to own a own business.

I know. Everyday when I walk through the parking lot and see all the

cars there, I think: I’m responsible for those people."

— MelindaSherwood

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Business Network International

A 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 business

but they use a lot of jargon that people don’t understand," he

says. "If you tell a story, people are going to hang on and understand

you. Through the story you can talk about you, your company, and what

you’re able to do."

Founded in 1985 in California by Ivan Misner, called the "networking

guru" by Entrepreneur magazine, BNI claims to have over 24,000

members and to have exchanged referrals worth more than $484 million.

The Princeton chapter of BNI meets every Thursday morning at Cafe

600 at 600 Alexander Road. The next meeting is Thursday, July 6, at

7 a.m. Annual membership fees are $240. Call Warringer at 609-919-2340.

Referrals are not forced, but at each week’s meetings referrals are

passed. After introductions, one BNI member will typically give a

speech on his or her profession.

BNI allows only one person per profession in each chapter, and it

currently needs a residential realtor, travel agent, landscaper, architect,

and job placement professional. The following BNI members represent

several other professions: Mike Benevenia, a printer from Hatteras

Press; 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 professional

employer organization; Barbara Fascetta, personal effectiveness

coach, Coaching Advantage; Lee Hessberger CPA, Manuel S. Newman

Company; Mary Anne Kochut, consulting, Leadership Possibilities;

Jessica Lane, payroll services, Paychex; Michael Leo,

chiropractor; Bruce Lorenz, photographer, Image Maker; Genevieve

Necerato, copier sales, Mariner Business Solutions; Darnella

Parker, gift baskets, Treasures from the Heart; Jeff Pierson,

commercial realtor, Weidel Realtors; Joan Pollock, computer

sales,; John Reilly, Life and Health Insurance,

Ford Financial; James Scott, technology consultant, Scarlett

Systems; Stan Sobieski, home mortgage consultant, Wells Fargo;

Patricia Williams, cosmetics, Mary Kay; Irv Wischik, commercial

banker, First Constitution; and finally, Warringer, a financial advisor

at Paine Webber.

A native of eastern New York, Warringer earned a BS in business management

from SUNY New Paltz, Class of 1998, and currently lives in South Brunswick.

After attending several Middlesex Chamber events, he decided to form

the Princeton area chapter of BNI. "It’s been one of the most

successful of the BNI chapters because of the tremendous number of

referrals passed and the number of visitors," says Warringer.

But it’s not all business. BNI also arranges activities outside of

the weekly networking meeting and recently held a golf outing.

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Merrill Lynch

Merrill Lynch is protesting two Hopewell Township ordinances

introduced in May that would change zoning on its 440-acre Scotch

Road property. The ordinance would change property currently zoned

for two-acre lots to a new category, called "Valley Agriculture,"

with four-acre lots. Merrill Lynch is using this property now as farmland

but claims that doubling the size of house lots would deter development

but 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. Call


The Merrill Lynch property in question is bounded by I-95 and Scotch

Road. Across the street from it is the other half of the Merrill Lynch

holdings, 425 acres, on which are being built 3.5 million square feet

of office space for 6,400 employees (U.S. 1, April 12).

Another proposed change — which would not materially affect Merrill

Lynch’s property — would create another new category, Mountain

Preservation by upgrading three-acre lots to six-acre lots. Also proposed

is eliminating any Industrial Office Park (IOP) zones in Hopewell

Township and changing them to regular Office Parks.

The township says the acreage changes agree with the master plan goal

of preventing sprawl, and that elimination of the industrial zone

will help prevent the roads from being overloaded.

Merrill Lynch, through its attorney Chris Baker, says it has

invested $11 million in road improvements around its site. Baker predicts

the new rules could cause burdensome development. "We felt it

imperative to get on the record our feelings that downzoning our west

side property may not be in the best interests of our firm nor in

the best interests of the community," says Joe Cohen, spokesperson

for Merrill Lynch.

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Building Workshops

New Jersey Housing and Mortgage Finance Agency is offering

free training workshops for developers and nonprofit sponsors submitting

applications to the Urban Home Ownership Recovery Program (UHORP)

on Thursday, July 6, or Wednesday, July 26, from 9:30 a.m. to noon

at the HMFA headquarters located on Dye Street in Trenton. The deadline

for submitting applications is August 17; call 609-278-7617 to get

one. To register for the workshop call Joyce Kaminski at 609-278-7550

or Deborah Dashefsky at 609-278-7566.

The UHORP program encourages mixed-income development by financing

the construction loans for new for-sale homes in urban areas. Private

commercial lenders are helping to provide this construction financing,

and a special fund is also providing $5 million in subsidy funds to

home buyers. In four years, HMFA has partnered with 16 private lenders

to provide a total of $164 million in construction financing and subsidy

funds. In Trenton, 19 townhomes were built in Clinton Park for a development

cost of $1,820,250.

HMFA operates programs to rehabilitate, construct, and finance affordable

housing. Its funding and operating expenses come from the sale of

taxable and non-taxable bonds to private sector investors (

"HMFA is proud to be involved in bringing home ownership opportunities

back to our urban neighborhoods," says Deborah De Santis,

executive director.

Below market-rate permanent loans with little or no money down are

also available. For information on HMFA consumer mortgage programs

call 800-NJ-HOUSE.

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