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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, 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
Chalfin’s advice for people trying to value their business:
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."
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?
physically unable to run the company," says Chalfin. "They
don’t realize their own limitations."
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."
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, Handtech.com; 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
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.
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.
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 (www.state.nj.us/dcs/hmfa/).
"HMFA is proud to be involved in bringing home ownership opportunities
back to our urban neighborhoods," says Deborah De Santis,
Below market-rate permanent loans with little or no money down are
also available. For information on HMFA consumer mortgage programs
Corrections or additions?
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