Jeffers Starts Valuation Biz

Dissolutions between business owners can be gut-wrenching.
Those transferring ownership of the family business to a company a family limited partnership may find the process fraught with challenges.
Selling or buying a business can lead to tough negotiations.
All are emotionally charged situations with numerous pitfalls, but Tracey Jeffers is helping entrepreneurs work through these predicaments with her nw business, ValuPath Advisors.
She had been working as the director of Fayetteville’s Arkansas Small Business Development Center at the University of Arkansas Walton College of Business. Feb. 28 was her last day as a state employee, and she didn’t miss a beat as she opened her new business March 1.
Jeffers said she has a big advantage in the market because she is the only certified business appraiser in Northwest Arkansas. Until now, parties looking for this type of service had to turn to firms in Little Rock or even out of state. Her services are scarce as there are fewer than 1,000 certified business appraisers nationwide.
“I think the market is mature enough now to support this type of service because there is so much small business development in this area,” Jeffers said.
Jeffers received her certification through the Institute of Business Appraisers, based in Plantation, Fla.
ValuPath operates as an independent voice for business appraisals and valuation-related services. The goal is to give parties an objective valuation based on reliable analysis.
ValuPath targets the owners of privately held companies and the many issues owners experience sooner or later. Jeffers said she has several jobs under way, one that involves passing a business along from father to son.
Her services include estate planning, as well as tax compliance, marital dissolutions, acquisitions and sales, financing and valuation reviews (analyzing other appraisals, which can be beneficial for litigation purposes).
“I would say my rates are going to be comparable to attorney fees,” Jeffers said.
ValuPath will use a mix of fixed fees and hourly rates. Jeffers said the range of hourly fees will typically run $100 to $175 per hour, depending on the complexity of each situation.
Jeffers’ startup costs were minor, she said, amounting to about $20,000. She said education and her valuation resources were the bulk of expenses.
Into Values
Jeffers graduated from Louisiana Tech University in Ruston with a degree in marketing, but said she would get her degree in finance if she had to do it over again.
After graduation she began working for the SBDC at Louisiana Tech. She enjoyed the work because it was a chance to help people realize their dreams.
“What we do in consulting work impacts people forever,” she said.
This is also when she found a love for valuation.
While attending an SBDC conference, a session called “Valuing Small Companies” caught her eye. By the time she reached the conference room, nearly all the chairs were taken so she had to sit in the front row. When the afternoon-long session ended, she turned around to see that nearly everyone had already left.
She was hooked.
“I walked out of there thinking, ‘This is the most interesting thing I have ever learned about small businesses,'” she said.
Determining risk levels, risk triggers, depth of management and looking at industry cohorts fascinates her.
“It’s really an investigative process,” Jeffers said. “Certainly, numbers and financial analysis is a part of it, but I enjoy looking at small businesses from a holistic view.”
Too many people try to use “rules of thumb,” Jeffers said, but that is dangerous and not valuation.
Helping Others
Walking people from concept to ribbon cutting is a dream job for Jeffers.
She has worked with the full range of small businesses — those with revenues less than $500,000 to companies doing $50 million per year.
One local entrepreneur Jeffers has helped is Rebecca Miles, who took over Arkansas Party Rentals on Oct. 20.
Miles’ banker and the business broker she used both mentioned Jeffers as a good resource.
“I was looking for the same kind of help homebuyers would want,” Miles said. “I wanted to know how to determine the actual value, not the emotional value that we all attach to something that we’ve raised or we’ve built.
“If you’ve built a business, and it’s your lifeblood, you want to maximize the value that you get when you sell it. You may not look at that business value the same way a neutral person would.”
Jeffers and Miles poured over the numbers and comparison data for a fact-based analysis, removing the emotion. They also walked through the different ways a business can be valued, for example, the difference between the seller/broker and the independent valuation perspectives.
“In a word, she’s awesome,” Miles said. “She’s a very bright lady with a lot of experience, who took all the noise and all of the extraneous detail out and focused on the core of how you determine what a business is worth.”
The work Jeffers put into Miles’ search gave Miles the ammunition to sit at the negotiation table and hold her own with a fair and neutral perspective.
During the process, Jeffers suggested Miles take a class on recasting financial statements so she could learn to decipher actual operating costs from such statements.
“What impressed me is that when I showed up for class, Tracey was in it too,” Miles said.
With all her experience, Miles said, Jeffers is still willing to learn about the valuation industry.
Moving On
Jeffers joined the SBDC in July 2004 and said she enjoyed her experience at the university.
“I’m really grateful to have been a part of the university family and the university community, but appraisals have always been my passion,” she said. “When the opportunity came up, I had to take it.”
During her tenure as director, Jeffers estimated she individually helped more than 200 small business owners. In 2006, she helped more than 70. She also taught seminars for the SBDC, which had 1,500 attendees during the last two years.
Larry Brian has replaced Jeffers as director of the program. She said his experience makes him a qualified leader.
Jeffers is still working on the future. She said most in the valuations industry prefer to work alone, but she would like to grow.
She hopes to take on a staff in order to offer complementary services for her clients. Jeffers believes a financial planner and an accountant would make great additions to her business.
Jeffers said most of her work will come through referrals from the legal and accounting communities. She also anticipates working with a number of business brokers. This year, she expects to conduct 40 to 60 valuations.
Jeffers is among the leaders in the valuation industry. She is a principle member of the American Business Appraisers National Network and is also a member of the Institute of Business Appraisers. The IBA recently appointed Jeffers to its Qualifications Review Committee, reviewing appraiser applicants.
“It’s an opportunity to give back to my profession,” she said.