Working on a regular basis with entrepreneurs – people who are innovative, growth-oriented and able to make decisions quickly – is so thrilling for David Katzen, that he can’t believe he actually gets paid to do it.

Katzen is a certified business appraiser and principal of Katzen Marshall, a general business valuation firm he co-founded with David Marshall 21 years ago, in Dallas, Texas. The company services entrepreneurs with businesses generating annual revenues from $5 million to upwards of $200 million. Purely a financial valuation group, Katzen Marshall doesn’t handle hard assets, but it does work with experts who do. “I always have cards ready of folks we like to work with,” Katzen volunteers.

In the 1990s, Katzen was a partner in Ernest & Young’s Business Valuation Services Group, where he worked with large clients and entrepreneurs, whom he refers to as “the sharp end of the business.” It was his fondness for the small business owner that led him to start his own company. “I find there are a lot of creative people we work with,” he says of his clients.

Unlike large corporations, which focus on financial reporting, entrepreneurs opt for him to play more of an advisory role in their businesses, allowing him to have an impact on decision-making. It’s the one aspect of the job that he likes the most. Occasionally, a prospective client will come in to fulfill his curiosity. Katzen calls this a “look-see,” often spurred by wanting to know a company’s potential worth, in case they decide to sell it someday. In that capacity, the firm fulfills the role of trusted business advisor.

Fifty percent of Katzen Marshsall’s time is spent on valuations for mergers and acquisitions, exit strategies and/or succession planning, beneficiary defective grants or trusts and other vehicles attorneys use to transfer equity interest to family members or management in a business. The remainder is taken up by valuations for:

•    Employee Stock Ownership Plans (ESOP)
•    Litigators
•    Intangible Assets
•    Dissident Shareholder Actions

Clients choose the firm because it adjusts quickly to changing circumstances and is cost-competitive when compared to larger valuation companies, particularly the Big 4 accounting firms that have their own valuation groups. Like a lot of firms their size, Katzen notes that the company might be perceived as regional but it’s actually a national company serving clients nationwide. It also does international valuations for businesses in Europe, Mexico and the UK.

The work is never dull. ”The problems that come up during valuations are similar, but never the same,” Katzen observed. This varies, based on the nature of the project and type of transaction. For example, many times, patented technology may not have a history of cash flow behind it. He said, “We may have to estimate – really, guesstimate – the average cash flow based on the future cash flow.” Another interesting challenge is the valuation of “personal good will” versus “business good will.” It begs the question, “How much does ‘good will’ truly relate to the owners of the business versus how much of it truly relates to the business?”

He admits the questions that come up can be unusual at times. Take for instance “Fair Value” versus “Fair Market Value.” The two concepts sound similar but have completely different meanings. Fair Market Value is the price at which you are willing to buy and sell. “It’s a hypothetical value that assumes a cash transaction,” Katzen explained, “whereas Fair Value answers the question, ‘Is it fair to one party or another?’ When applied to ESOP cases, it delves even deeper by taking other issues into consideration in determining value, such as the terms, interest and duration of the note.

Although rare, inevitably, Katzen Marshall has had its disappointments. But Katzen takes it in stride. Quoting Clint Eastwood, he said, “You can’t be all things to everybody. A man has to know his limitations.” If the firm is not qualified to do something that a client needs to have done, Katzen will tell that client upfront, honestly and directly. He quickly learned to get problems out of the way early. “It’s detrimental to the success of the practice,” he said emphatically.

In the coming year, Katzen plans to add due diligence work to his company’s services as a natural add-on to mergers and acquisitions. His goal for 2016 is to continue being a trusted, valued-added business advisor to his clients. He wants all of them to see the value in the work Katzen Marshall does for them rather than just the necessity of it, or because their attorney insisted on it.

What makes Katzen most proud is the name his company has made for itself in the industry. “The U.S. Department of Labor and the Internal Revenue Service know who we are,” he says. “Our reputation and the quality of work that we do behooves us well.”

Are you curious to know how much your company is worth?  Find out with a valuation by Katzen Marshall. It might surprise you or, at the very least, give your business a new direction.

For more information visit: www.katzenmarshall.com