ClarityBV Blog

Behind every financial statement and tax return is a story. For me, getting a glimpse of the human side of business is one of the most enjoyable parts of the valuation profession.

• Did you know the wealthy business owner, who seems to have been born with a silver spoon, worked two jobs for 20 years?
• Did you know the couple that looks exactly like a “Harley stereotype” are multimillionaires?
• A family business just had a massive drop in sales. Why is the father still demanding top dollar from his son to transfer control of the company?

Working with numbers can be fun, but they take on a whole new meaning with context. “Data” took an “emotion chip” to feel emotions and understand human behavior. The classic “Tin Man” story highlights the tension between mind and emotion. Without these human elements, valuation could be distilled to a single formula, markets would be perfectly efficient, and we might be robots…

What is “clarity”?

Clarity: Free from obscurity and easy to understand; the comprehensibility of clear expression.

Why use clarity in the name of our business?

The concept of clarity resonated with me in two major ways.

1. Having a clear sense of direction and focus to start and run a business.
2. A goal to make the valuation process straightforward and transparent.

There is no perfect valuation formula. Experience, intuition, and judgment are an intrinsic part of the process. We try to add value by stating the facts and summarizing judgment calls as clearly as possible.

Many “sages” have noted that it is better to be approximately right than precisely wrong. Uncertainty is inherent in valuation. So, we try to avoid the traps of false precision or of needless complexity.

Confession: Since I like to string together long complex sentences, tools such as “reading ease” and “grade level” are a big help. This post has a reading ease of 57.0 and a grade level of 8.1, according to a popular word processing program. Our last valuation report had a reading ease of 26.4 and a grade level of 14.1, including every footnote, technical definition, etc. How low can we go on grade level? Don’t know yet, but we’ll keep working to find out…

Are you an infovore? (Of course, no sooner was the phrase coined than folks started work on how to market to the infovore!)

Just in case you need more content in your life, here are a few good things we’ve been reading of late…

• Outliers by Malcolm Gladwell (I really liked the 10,000 hour rule section, which coincides nicely with the requirements for the Accredited Senior Appraiser designation from the American Society of Appraisers.)
• The peHUB blog is a great way to stay current from a private equity viewpoint.
• Finally, the In Search of Perfect Client Service blog by attorney Patrick J. Lamb always challenges me with thinking about how to take professional services to a higher level.

And, if you’re more into video… Check out the television show Shark Tank. A bit corny, but fun to watch valuation being done on the fly. It was heartbreaking to watch the entrepreneur that had mortgaged everything. As one of the “sharks” noted, knowing when to quit can be the toughest thing.

Our little corner of the country has been surprisingly popular with the President.

Obama Returns to Elkhart as Free Fall Slows in Indiana Economy

While many officials want to put a positive spin on things (the alternative is just too depressing), the local economy seems more like one of those cartoon characters hanging from a cliff!

We may have caught a little break, but it doesn’t necessarily mean the worst is over. My biggest concern is that we’re headed for round two once unemployment extensions run out.

Anecdotal evidence suggests jobs are still incredibly difficult to find, even for strong applicants. Others are simply abandoning ship and leaving the area. If unemployment benefits are the only thing keeping folks in their homes, the housing market may have another blow to absorb.

On the other hand, this summer has been surprisingly busy here. So, enough of the navel-gazing and back to work on a valuation report…