Forensic accountant Angela Rice explains how financial literacy and marginal profitability advantages compound into valuation premiums and buyout power over a 5-to-10-year horizon.
“And slowly over five and 10 years, if your profit margin is five, 10% greater than your competition, eventually your valuation is going to be substantially greater than your competition.”
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Opinion
Rice: Collecting a paycheck without doing the work constitutes fraud
“To me, it's fraudulent if you're supposed to be working and you're not. And I think that's why it's really important to have technology and ways to track the performance of your employee. If someone's supposed to be Working in a call center calling 50 differen…”
Angela RiceJun 8, 2021▶ 36:12The Key Man Discount: The Hidden Number Killing Your Company's Valuation
Insight
Rice: Over-Outsourcing Accounting Stops Founders From Understanding Financial Data
“And I think a lot of accounting can be outsourced. But I think it's also very important for a business owner to understand you don't want to over outsource because it's important that you have somewhat of a learning curve so that you understand your financial …”
Angela RiceJun 8, 2021▶ 7:58The Key Man Discount: The Hidden Number Killing Your Company's Valuation
Insight
Rice: Startups Should Avoid Early CFO Titles and Outsource Executive-Level Finance
“The CFO title is automatically going to have a premium attached to it. So I would really look at resumes where you can kind of get a good sense of someone's financial background, where they have financial analysts for a large company, and do they really know y…”
Angela RiceJun 8, 2021▶ 23:28The Key Man Discount: The Hidden Number Killing Your Company's Valuation
Insight
Rice: Passive investors should require independent audits to verify company financials
“If I was an investor in a business and I wasn't actively part of the management, I probably would want an audit. You'd want to know that somebody is reviewing the financials for accuracy and reliability.”
Angela RiceJun 8, 2021▶ 30:59The Key Man Discount: The Hidden Number Killing Your Company's Valuation
Insight
Rice: Failing to Segregate Accounting Duties Leaves Companies Vulnerable to Fraud
“If one person has complete control of all of your financial data, as well as your bank statements, and they are the ones that receives payments and makes disbursements to pay for things. That is really a great area. And I'd advise you not to have one person do…”
Angela RiceJun 8, 2021▶ 8:23The Key Man Discount: The Hidden Number Killing Your Company's Valuation
Insight
Rice: Key man dependency causes one of the biggest small-business valuation discounts
“One of the biggest discounts that is applied to evaluation in a small business is the key man discount, the value of the owner. If the value of the owner is taken out of the business, Extracted from the business that's going to reduce the value.”
Angela RiceJun 8, 2021▶ 40:32The Key Man Discount: The Hidden Number Killing Your Company's Valuation
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