Ep. 5 The Number Is Just the Beginning Featuring: Shina Culberson.
Most business owners think a valuation is a number. Shina Culberson thinks that’s where the real work starts.
Shina is president of Quist Valuation in Boulder, Colorado — a specialized firm doing nothing but business valuation, 200 to 250 engagements a year, for 40-plus years. She’s also a CFA and a CEPA, a combination almost nobody in her field holds. In this conversation, she and Bob Roark walk through what really happens when an owner turns to the last page of a valuation report and has a heart palpitation — and what Shina does in the minutes that follow to turn that moment into a roadmap.
She also makes the case for why hearing a hard number from her is infinitely better than hearing it for the first time from a buyer across the closing table — when there’s no time left to fix anything.
The number isn’t the destination. It’s the starting line.
The Exit Series is produced for general informational and educational purposes only and is not investment, legal, or tax advice. Views expressed are those of the host and guests and do not necessarily reflect those of any affiliated firm. The host is associated with an SEC-registered investment adviser; nothing herein constitutes an offer or solicitation of advisory services. Guests are not necessarily clients.”
Shina Culberson: ⁓ Bob, thanks for having me. so yeah, I’m the president of Quiz Valuation. We are a business specialized business valuation firm. I like to say that business valuation is the only thing that we do all day, every day. So we’re ⁓ dedicated to the specialty and expertise of working with business owners, helping them understand the value their company is for a whole variety of purposes, which I’m sure we’ll get into. ⁓ But yeah, so I came into a the world of business valuation ⁓ from actually the public market side of the business. I ⁓ was first a fixed income analyst. So what that means is Basically a credit analyst. I was analyzing debt securities of publicly traded companies. Most of those companies in my former life with Charles Schwab Investment Management was with international financial institutions. I then later in my career switched over to the equity side of the business. So I was an equity analyst valuing publicly traded companies for some hedge funds in the Bay Area. And then I finally made my way to Colorado and ⁓ valuing privately, closely held businesses and I finally found the segment really that is I think the most interesting. And ⁓ I’m sure we’ll get into all those details as we move forward.
Bob Roark: You know, it we were talking just before the show started about the difference in what Quist and you do versus perhaps getting a valuation from a firm that does valuation, does accounting, does bookkeeping. I mean, you know, so the specialist commentary versus the generalist commentary, you know, what do you see as the key differential and what’s the decision point for a client to select? Quist versus a generalist.
Shina Culberson: Yeah, so I mean, it’s one of the reasons why I describe what we do as business valuation is the only thing that we do every day, all day. because we are not generalists, we’re not accountants trying to be business valuation experts, we’re not business advisors overlaying valuation, we’re not, you know, coaches coming in and and
Bob Roark: Mm-hmm.
Shina Culberson: doing estimates of value. We are really focused on doing business valuation right to meet the client’s need, specific needs. So we’re doing 200 and 250 valuations a year. We’re able to see private companies across a broad range of industries. And after 40 plus years of being in business, you just start, we we’ve done thousands of values, tens of thousands And in my own head, I have just a rolling like Rolodex. And every company gets kind of slotted into where they’re doing well, where they’re not doing well, how does this company compare to another company? So you just kind of get that perspective with time and just seeing a lot of different companies. And so, you know, we’re able to just ⁓ we we hire specialists. They’re highly focused, they’re highly educated in just this area. And ⁓ so it’s a little bit different than going to, you know, a kind of a a firm that maybe does it all, where they’re just tend to be more generalist. so yeah, we’re we’re really proud about, you know, the the specialty and the education and the insight that we can bring to our clients when they work with us.
Bob Roark: You know what what comes to my mind is kind of the downstream effect. And so let’s say that you’ve done your work on a particular company. At some point, if there’s the acquiring entity that’s looking to take the company you valued, I would think that your valuation has some level of weight with the lending institution. What do you see there?
Shina Culberson: I mean, y yes. So whether it’s a lending institution or the IRS or the SEC or you know, an auditor, you know, everyone looks at your credentials to see, you know, what what are your credentials, what’s your experience, what’s your credibility in actually performing this work? So, you know, again.
Bob Roark: Mm-hmm.
Shina Culberson: Ві In a prior life of Quist, we you know, our mission statement was to provide the valuation to meet the highest standard of scrutiny in the industry. We’ve since broadened sort of the way that we think about that, and we can for a number of reasons, but ⁓ we still provide high scrutiny work. we’ve broadened the mission of what we do with business owners because ⁓ business owners of closely held companies are dealing with so much so many other issues. They don’t want to hear a technical ⁓ diagnostic of their business. They want the kind of issues lifted a little bit higher level for them to understand how how to actually grow value in their business over time. but that’s just more of a cultural thing that we change within the organization. But just generally ⁓ you know being able to see companies and be specialized in the industry just helps us give the business owner more context ⁓ in the evaluation process.
Bob Roark: You know, for for you going back to your training, you’ve got a CFA and you have a certified exit planning advisor designation. You know, those two credentials don’t typically run into each other in one person. You know, so walk me through what took you down the CFA path and then what also took you in down the CEPA path.
Shina Culberson: Yeah, ⁓ so this is kind of what I was alluding to. You know, in my early career, early part of my career, when I was valuing publicly traded companies, publicly traded credits, it was really analytically focused, right? There was public information, you can gather information about companies, it was all available, it was a lot of number crunching, a lot of analysis. in how do you prove out future cash flows through a DCF, etc.? But with closely held businesses, you quickly realize that you’re dealing with people, people with real issues, family issues and family owned businesses, partner issues in companies that have been started with your friend, your your ⁓ you know your friend from college you you you have this great idea you’ve come out of college you start a business so though there’s so there’s a lot of personal dynamics when working with closely held businesses that you aren’t necessarily ⁓ faced with when when looking at publicly traded companies So the SIBA credentials helps me broaden my comfort level of asking questions to the business owner beyond just business value, but really also understanding where do they stand from a personal financial perspective? Where do they stand from a just a personal planning perspective? What do they want to do? What are their goals with this company? What sort of legacy do they want to leave? So one, the SIBA helps me just expand that that range of questioning. But the second really important difference is publicly traded companies have access to liquidity through the public markets. ⁓ Capital is not so hard to come by, but privately held companies ⁓ have oftentimes, you know, have to really tightly manage their capital usage, their cash management. And they’re all seeking eventual liquidity events, whether that be through an internal or external transfer. So the SIPA is a great, you know, this the CFA designation is a great analytical tool, helps us understand broad markets. But the SIPA is a great additional tool to help us have those one-on-one conversations with the business owner to really help them to really kind of help us understand where they want to go with the business.
Bob Roark: Mm-hmm.
Shina Culberson: what’s the end goal they want to achieve with the business in terms of the personal in financial go personal financial goals. ⁓ so it’s a really great I found that it’s it’s helped me be a better analyst, to be honest, ⁓ the CEPA destination, because it’s ⁓ given me the confidence to broaden up the conversation with business owners.
Bob Roark: Mm-hmm. You know, quiz valuation’s been doing this work for decades, you know, and and I think for many, I don’t know that a mental image shows up when they think about valuation. What kind of businesses do you actually value? You know, is it just like small manufacturing or what’s the the range of businesses that you find yourself working with?
Shina Culberson: that’s a great question. And you know, I think that’s one of the most ⁓ interesting and fun things about what we do here at Quiz. Every month ⁓ the the slate of companies that we’re looking at are so different. So just this month alone, we are looking at let’s say in a we have an insurance agency that we’re valuing for personal goodwill analysis. We have a We have a for example, company that provides IT support for financial institutions, ⁓ and they’re doing a capital raise. ⁓ we’ve got a company that is ⁓ a canning manufacturer, so more of your traditional but they’re really interesting because they’re They’re doing tax and estate planning work. It’s a family-owned business, but they’re in this in the process of doing kind of a pivot to the the end consumer and the end market that they’re that they’re looking at. So we look at you know distributors, manufacturers, professional service firms, engineering services, architectural services. ⁓ and so it’s that broad range of of different types of companies that we get to look at, you know, there’s fundamentals to every valuation that need to be in place, but it’s those ⁓ the markets that they ⁓ that they ⁓ address, their management structure that makes those you kind of unique points in every organization that ⁓ makes every sort of engagement that we do a little bit different.
Bob Roark: Yeah. It it sounds fascinating in the diverse range of tasks that your work supports or answers for a daily, you know, ⁓ going to work and looking forward to going to work, for sure.
Shina Culberson: Yeah, it’s it’s always a new ⁓ a new ⁓ interesting sort of story with every company. Although there’s a lot of we’ll get into it too. There’s a lot of, you know, common drivers acros across organizations that need to be in place. Those are the f foundational drivers of every business. ⁓ but every company has their own unique, you know, origin story and and their ⁓ and strategy.
Bob Roark: Sure. You know, when when you’re ⁓ meeting a business owner for the first time and you haven’t run a single bit of analysis or a number, you know, do you get a read off of them, you know, when you first talk to them? And do you think, you know, do you get in that read ⁓ whether you think they’re open to hearing what you’re gonna find?
Shina Culberson: Yeah. Bob, I love this question because even before we’re ever engaged, one of the very first questions I ask is if the business owner and the company ⁓ prepare multi year projections. And oftentimes, more often than not,
Bob Roark: That’s what I’m saying. Mm-hmm.
Shina Culberson: the business owner will tell me, why would you ask me to make up numbers and look into my crystal ball, which I can’t do, and at and think that that would be accurate at all. And they sort of push back as to why I would ask this question of them or request this information. And for me, it’s not do I
Bob Roark: Mm.
Shina Culberson: Yes, I’m I’m kind of interested in what their budgeting process looks like, but more importantly, what it what I’m trying to understand is how much business planning and strategy have they done? Do they understand where they want to take their business? Do they understand the dynamics that have driven their performance historically? And where do they think their performance going forward? What will it that look like? And you can only communicate that if the projections is one way, multi-year projections is one way of getting your head around those dynamics. So it’s not about having the most accurate projections, although we again we want to understand the the the process and putting those together, but it’s more about how much strategy have you done with the of thinking about where the company’s going? How much do you understand about the current market conditions and how that’s going to impact?
Bob Roark: No.
Shina Culberson: future growth or profitability, especially in today’s environment with inflation and tariffs and all kinds of different really difficult market dynamics. How much have you thought about that and do you have a contingency plan in place for those for those ⁓ pressures? So again, it’s it it gives me very quick insight into how a business owner or a company thinks about ⁓ themselves without ever having
Bob Roark: Yeah, yeah.
Shina Culberson: been yet engaged with the company.
Bob Roark: ⁓ you know, I I love the discovery indication. You know, do you plan some or you just kind of day to day? You know, you know, and when when you ⁓ are going through evaluation process, I you know, I I’ve not had one, so I have no idea. So you know, walk in the process, you know, what’s happening each step. And you know, for the owner, where do they typically feel the outcome the most?
Shina Culberson: Yeah. So we you know, I’ve again the company’s been around for 40 plus years and we have developed a a a a relatively sort of a a pretty defined process for us in what works for us. and so what our process looks like for evaluation is First we we collect all request like we collect all corporate documents, financial documents, company presentations, you know, descriptions of management, employees, et cetera. We collect all of that up front. So from a business owner perspective, that is if if it’s not already in place, you know, business owners don’t know how where their records are, that can feel like a heavy lift. ⁓
Bob Roark: Yeah.
Shina Culberson: But from there, once we collect information, we’re reviewing it, seeding our models, looking at ⁓ industry research, we’re starting to pull in market information into our modeling. And in about that week three time frame, so that’s week one, then we process all the information, week two, week three, we’ll do a management interview ⁓ with the leadership team. And this is where we’re able to ask questions about the information we’re reviewed, do your kind of SWOT analysis, what’s working in the business, what’s not working in the business. How do you just simply make money, right? What are some of the ⁓ perceived challenges? Have you dealt with them? ⁓ you know, are there any open hiring positions required? So all those sort of ⁓ aspects that that help us understand how the company the business is running. So that’s another sort of time commitment from the business owner. And then we take all that information in-house and we then incorporate that information that we learned ⁓ into our modeling. The analyst presents that what they believe is a value for the company we have in an internal valuation meeting. This is a fun part that we all play internally. We all put our different constituency caps on. So if it’s a shareholder issue, we’re gonna play different roles of the shareholders. If it’s a tax issue, I like playing the IRS. If it’s a, you know, if ⁓ if it’s a capital raise and someone’s gonna be playing the financier, like why would you you know, what are they looking at in this business that would cause them concern. And so we’re playing that role. There’s we believe that more people it you know, the more people we have involved, ⁓ the different perspectives we can get. So we do tend to bring in it’s myself, the director of evaluation services, the analysts, and we’re kind of vetting thro that process by playing different roles. So once we’re all on the same page, the analyst will write that.
Bob Roark: Mm-hmm.
Shina Culberson: those findings up and then the report goes through two quality control readings in week, let’s say five and six. And then we deliver that report to the to the client. And so we bookend the process with a with a call or meeting with the client to review and answer any questions. So we really have a defined like the business owner time is going to be spent in week one collecting documents, week three doing the evaluation meeting. And then at the end, let’s say week s six or seven, kind of doing that that that ⁓ download of the findings and ants and answering questions. so that’s kind of where the heavy lift is for the business owner, although there’s a lot happening in between ⁓ the process.
Bob Roark: Yeah, I can imagine the the look on the owner’s face ⁓ not knowing the ask and then getting the ask and go, yeah, that’s a heavy lift. So, you know, in in you produce that valuation report, you know, attorneys use it, the brokers use it, the buyers use it, the owner uses it. You know, when you present that report to the owner and the owner sees the number for the first time, what happens in that room when that instance occurs?
Shina Culberson: w well
Bob Roark: Okay.
Shina Culberson: It’s very rarely, very rare do we produce a number that’s ⁓ at the mark, to be honest. Either the business owner is like more often than not, they’re like, ⁓ I thought the value would be a bit higher. sometimes on some occasions, I mean we’ve seen some really what we believe are some really phenomenally run
Bob Roark: Mm-hmm. Mm-hmm.
Shina Culberson: ⁓ companies I have one company of mine, they were an HVAC company, they were working with their advisor. They had they were so on it. They had key metrics in place. They had really defined roles and responsibilities. They it the that company was not dependent on any one individual. And they just were very clear about what they wanted to do with that business and how they wanted to ⁓ employ a really employee culture first mentality through the organization. And so that is I I always remember that because that was one time where we’re like, hey, we think here’s the value of your company. And they were like, ⁓ they were so surprised. It was higher than they thought. ⁓ and they were pleasantly surprised. I I would say that that is more rare. It’s oftentimes the business owner is like, ⁓ I’m so you know, this is not quite as high as I thought it would be. but that’s why we do the wrap-up at the end as well, because most times business owners turn the last page, they look at the number, they have a little bit heart palpitation. ⁓ and then that wrap-up at the end is why it’s so important. So we can walk through like, hey, here, this is what we heard you say. This is how we incorporated these risks into our assumptions, and this is why the value is coming out where it is. Here’s some other aspects you said about the business that were strengths. And you know, this is how they were incorporated. And so we’re able then to then pivot that conversation to help the business owner understand like what are things they can do in their business to immediately improve value. Like, ⁓ so an easy one, I mean, a really a common one. And maybe it’s not easy because it’s so common. but I think with most closely held businesses, and I’m victim of this too in my own business, we just wear a lot of hats, right? It’s as entrepreneurs, it’s really hard to delegate. We think we’re the best at what we do. ⁓ no one can do what we do. It’s why we’re founders of our our companies. And so
Bob Roark: Mm-hmm.
Shina Culberson: just even getting the the owner, even if they’re a partner, like let’s if you could just even imagine different roles within the organization and what other and develop a a job description and what they would do and who you would hire and ⁓ just to expand the leadership team or to delegate more of more of those duties to make you Just focus on the thing that you do the best. ⁓ you know, that’s not that’s something that’s takes time, but relatively easy to to kind of get your head around. Cause key man risk and owner dependency is the number one risk in every closely held business. ⁓
Bob Roark: Mm-hmm. Well, you know, the I would see the motivation if you look at the difference in the valuation. This is what it looks like with owner dependency. This is what it looks like if it doesn’t have owner dependency. There’s your motivation too.
Shina Culberson: Right. And so we’re able to show the business owner, hey, you know, because of the huge owner dependency, this was the discount rate. Or because of the owner dependency, here’s how we thought about the multiple. ⁓ and so if you can improve those things, when we come back next year and we see that you’ve filled out some of these positions that you need, then you can anticipate that the multiple is gonna go up, the discount rate’s gonna go down, the value is gonna go higher, and we can help them understand that sort of impact on just that one aspect alone.
Bob Roark: Yeah. Yeah, and I think ⁓ my sense of things is that’s kind of an unend an un unappreciated outcome benefit from what you do is you go, you know, here’s your value drivers. Here’s the ones you can you can work on, you know, and I think from a lending institution you look at that and they know their value drivers, they know what drives value. You know, our risk to that business owner is less because the quality of their work and value of their company goes up. So It seems like to me that that’s a fairly straightforward discussion. But then again, maybe not. You know, and go you know, going into the the valuation gap, you know, and that’s where the number doesn’t quite come in where the owner thought it would, you know, ⁓ w what’s that person? You know, what have you seen in the range of reactions?
Shina Culberson: Mm-hmm. Mm-hmm.
Bob Roark: To when they hear that number, what do they do?
Shina Culberson: Yeah, I mean I I mean I we take a very sort of educational approach with our clients. I think you know the one of the very first things I asked when we get engaged with a prospect, first I asked them if they’ve ever been through the process before because it can feel very I think y you know, you’re exposing a lot.
Bob Roark: Okay.
Shina Culberson: to the to the business owners exposing a lot of themselves, their business, their financials, how they think about their business to us. So is it a vulnerable ⁓ exercise, I I I get that. And so I wanna first understand where they are and ⁓ if they’ve ever exp gone through this process before. Then I always preface hey we are independent and pious. We’re gonna give you
Bob Roark: Mm-hmm.
Shina Culberson: That number, it may come out where you think it is. It probably won’t. But our end goal is to help you improve that value over time. And so we prophesy, sort of we we kind of go into the engagement saying, Hey, some things are gonna be really easy to fix, some things are gonna take time, but
Bob Roark: Mm-hmm. Mm-hmm.
Shina Culberson: Better to hear this from us first before you go to market and you’re really sitting across the table from a potential buyer of the firm and you’re hearing it for the first time. Then you don’t have time to react to it, you don’t have time to fix it. you know, you don’t want to be surprised at that table. Better to hear it from us first. And so Sir I you know surprisingly business owners are not always happy with understanding they’re they’ve got more work ahead of them, of course, but I think they’re appreciative. the the n the most consistent comment I get from business owners who have worked with us is ⁓ this was a lot more thorough. ⁓ and a lot more educational than I thought it would be. ⁓ I thought you’re just gonna give us a number, not really get into this much detail and granularity about what we can do in our business to actually improve it.
Bob Roark: Boy, if that’s a criticism, that’s an awesome criticism. You can have somebody else look at their business from a an outside perspective and go, you know, here are the strengths and here’s the weaknesses, and this is what you can do to move the needle. So at least you have a solution at hand, whether you execute or not, you know, and you know that that kind of segues into the next, you know, thing. You know, that there’s a valuation gap that you discover, you know, that’s hard to deliver. Is there a sector or a business type or a certain type of owner where that
Shina Culberson: Ha ha ha.
Bob Roark: mm, you know, is the hardest message to deliver to the either owner or segment.
Shina Culberson: You know, the the hardest I I think some of the hardest businesses are really asset intensive businesses, sometimes manufacturers. partly because the way that business owners think about a really asset heavy business is you know what’s the value of my assets? Minus my liabilities, that my that’s my net asset value. but really what we if if if that’s the only value that’s left to those come that’s indicate if that’s the only value for that company is assets less liabilities, then you might as well just liquidate the company. ⁓ What we’re trying to to communicate to those business owners is. We won’t we wanna see the business have additional value on top of just the net assets of the company, right? It’s the customer relationships, it’s the trade, your your brand, your trade name, your reputation in the marketplace, it’s your s your relationship with this your suppliers, it’s your relationship with your employees, how do you ⁓ create a knowledge center across your employee employees so that when they’re coming to work and they’re manufacturing whatever it is, they’re doing it consistently with high quality that usually bears out in profitability and margin. So those are all the aspects that are gonna get the business to a value that’s greater than just the net asset value of the company. But it’s interesting to me, most business owners that I meet that are in asset heavy industry businesses just come in thinking the value of my company is the net asset value. And we’re trying to get them to recognize that it can be so much more than that. so ⁓ but when they’re when those businesses are just worth the liquidation value of the company, those are really hard conversations. We’re like, okay, there’s a lot of ⁓ There’s a lot of key drivers in your business that we think you’re you’re missing out on that ⁓ that could really help you with realizing additional value.
Bob Roark: Yeah, that would be where private equity come in and go, Yeah, we recognize this symptom and this is where we can execute on what the previous owner didn’t or a buyer, not necessarily just private equity, but yeah.
Shina Culberson: Mm-hmm. Right. Right.
Bob Roark: You know, you’re you’re in the circumstance where you deliver the number and the owner’s reaction, anger, denial, grief, or go, are you kidding? You know, and when when you hear that statement, what do you do to frame that particular behavior or what’s your next move? Or basically help the owner go from that emotional response to next. What do you do?
Shina Culberson: I I like to, you know, I like to communicate to the owner that they have resources available to them ⁓ to help them. ⁓ we are, you know, we belong through the Exit Planning Institute and just our decades of being in this industry, we have a lot of great resources.
Bob Roark: Mm-hmm. Yeah.
Shina Culberson: ⁓ that we can introduce to clients. And so you know, every more often than not, we’re able to help the client kind of prioritize. Like what would if I if I were you, and I am a business owner, right? If I were in your shoes, where are the top three things I would focus on? And we can help the business owner prioritize that and then we can help them get them introduced to the right people ⁓ to help them with that effort. And again, that’s another benefit of being having the SEPA designation because this being a certified exit planner is about bringing along the right team for the business owner, recognizing, you know, I don’t have all the skill set myself ⁓ to help the business owner in every aspect of their business, but I can recognize ⁓ where ⁓ improvements would be a benefit and who can and who to connect them to. So I I I am a solutions already import oriented person. I like to get to the do problem solving ⁓ quickly. I it’s one of my actually weaknesses. I have to really pr stop myself to so I can be a better listener to business owners before I start recommending in problem solving. ⁓ but I think by the time we get to the end of the engagement and the business owner is hearing what the value is, we can then start to, you know, move towards solutions and problem solving and and and helping the business owner walk through next steps. And we are so fortunate that we oftentimes get to see the benefit of that. those results. ⁓ you know, twenty-five to thirty percent of our business are repeat clients. So we get to be we get to see ⁓ that execution ⁓ and we get to oftentimes see businesses continue to grow year after year and in having taken sort of our suggestions or you know ⁓ identified risks and taken those to heart and actually remedied them.
Bob Roark: that that transformation has got to be pretty gratifying, truly, to to see that happen. You know, on on the other side of the fence, you’ve had experience defending valuations, you know, with the IRS sitting in the room. Y you know, and I’ve met those guys a time or two. you know, what’s it like when you have to defend your valuation number and, you know, what’s the vibe in the room when you’re sitting there with
Shina Culberson: Mm-hmm.
Bob Roark: An IRS examiner.
Shina Culberson: Yeah. you know the IRS has some very specific requirements. ⁓ so I don’t think a lot of people know this, but when you do when you perform evaluation for the IRS, so for any sort of ⁓ wealth transfer planning strategies, gift and estate strategies, your entire testimony, if you were ever to be sort of Audited has to be documented in that valuation report. ⁓ they really don’t, you can’t, you know, several years down the road, the business owner gets audited and then they start asking us questions like why did we get to the value that we were at? You can’t be like, ⁓ yeah, I forgot to, I didn’t put this in the report, but you know, at the time the company. had a lot I don’t know I’m making it but but like thought they were gonna lose their largest client right and that’s why the values at this level they frown on that so everything has to be really documented and supported the assumptions have to be supported but they’re really you know dealing with the IRS or an audit ⁓ A lot of times they’re just kind of like, well, they’re dealing with averages a lot. Like, ⁓ you know, we don’t this isn’t what we are typ we’re used to seeing. this isn’t what we’re familiar with. And so for us it’s really important to provide a storyline so that when we do tax valuation reports, one
Bob Roark: Yeah. ⁓ Mm-hmm.
Shina Culberson: To remember that these are sometimes not even full-time engineers at the service. Sometimes they’re out, you know, they’re hiring people outside of the IRS to actually come in and review reports. So they’re not necessarily always full-time employees of the IRS. ⁓ they’re probably generalists and not as familiar with the company as we are, and they’re really looking at ways to poke holes. Th that the whole strategy is just to poke holes in the valuation report. So we really approach it as okay, we need to be able to tell a story from the first page to the last page and string every sort of risk and opportunity together through the assumptions and do it in a way that you don’t have to be a specialist necessarily, a technical specialist to understand the r reason that the rationale in what we’re doing. ⁓ because we just don’t know who’s gonna be sitting on the other side of that table. we’re and ⁓ so we wanna make it really easy for that person who’s sitting on the other side of the table. That’s that’s our like number one priority. Like, how do we make this easy for them to understand our thought process and why? so it’s it’s you know it’s an interesting process, but
Bob Roark: Yeah.
Shina Culberson: If you’ve been through that IRS audit before, then it helps you understand how you have to proactively, you know, prepare for it, even though ⁓ you know, and we always sort of anticipate that every every report’s gonna be audited. ⁓ and so we we we go in with that sort of rationale. How do we make this easy for the agent on the other side to understand why we did what we did?
Bob Roark: You know, you I’m sure you’ve been in a circumstance where you’ve seen a valuation get challenged, you know, whether it’s yours or somebody else’s. You know, and what’s what do you would s would you say is the key difference between the valuation that holds and the one that doesn’t?
Shina Culberson: Yeah, so the number one ⁓ difference is not cutting
Bob Roark: Mm-hmm.
Shina Culberson: enumerating the risks, right? So or ⁓ the just not having the support. I so so ones that are difficult is like okay here’s what the company does we did these approaches here’s the value well it’s hard to figure out how you got to that value if you don’t walk through all the underlying Factors that drew you there, right? And so I picked this multiple because of why. I picked it because of these reasons. There was a size component, there was a profitability, there was key man risk, there was some customer concentration that made the revenue or the profitability uncertain, right? So you had to really enumerate all of those aspects that made you select that multiple. You can’t just say, well. The average multiple for the industry was four times, so I picked four times. They’re gonna be like, No, you can’t do that. That doesn’t hold up, right? ⁓ averages don’t hold up. ⁓ you really have to be specific ⁓ in the rationale.
Bob Roark: You know, I I I was thinking about, you know, the the push pull earlier we were talking about between being a CFA and a CEPA, you know, and and you think about in the process between valuation and exit, you know, do they do you see a clear demarcation between one kicks in and the other one drops off? Or do they kind of, you know, how does that flow for you mentally between the two?
Shina Culberson: Bob, honestly, at this point in my career, it just all meshes in one, goes in together. But you know, I think they I think look, I think if you when I talk to a business owner like I’m a business owner, and the questions get broader in sort of perspective, then it helps me understand.
Bob Roark: Yeah.
Shina Culberson: the broader goals and objectives of what the client’s trying to achieve. I’m trying to think of of an example here. ⁓ it might look like hey so a lot of times ⁓ people come to me and they go okay i want to i need evaluation because ⁓ i’ve got this person I’ve been working with and I think he might be a good successor to me. So I want to understand what the value of my company is. Okay, great. ⁓ that’s a very common conversation, right? I I I I I might sell him interest in my business, but I need to know what the value of my interest is ⁓ the company is first. I’m not really sure how much I would sell this person. And so it so that helps me go into a much broader conversation. Like, well, who else is on your team? Who’s gonna succeed them? How deep is that bench? Like, ⁓ because that might help me understand if they’re gonna put in, do you need to sell him direct equity, or can we put in can should they think about some sort of phantom equity plan or profit interest plan? What’s gonna happen? Are you gonna leave the business immediately if you sell them interests? you know, what how would that impact your client base? So it just helps us look a little bit beyond and and then they’re starting to do that kind of like, okay, what does this really mean for me if I sell a partial interest in my business to this person? How do I elevate them? ⁓ do I need to think about other sort of ⁓ planning for that next layer of employee. So I think it for me it all meshes together, but it makes me a better, it just makes me better at consulting with the client. So this is where, you know, valuation, I think people think about valuation is, ⁓ we’re just doing we’re just gonna give you a number. But for us, it’s much more about how are you planning for your business? What are all the different
Bob Roark: Mm-hmm.
Shina Culberson: aspects that you’re ⁓ considering right now in the future growth of the business and ⁓ how can we help you beyond just understanding what that number is. It’s not we’re not here just for this single transaction. We want to actually work the business owner across the remaining life cycle of their business to really make sure that’s successful. So it requires a much broader a broader scheme of questioning.
Bob Roark: You know, Quist is in Boulder and I’ve I’ve I think I was at I was at your office a few years ago. you know, for the folks that are listening to this that may not be in Colorado, you know What is, know, is there any kind of business that you really don’t work with? And how do these people that are you know want to find basic I think you offer more than valuation, like we’re talking about with the CEPA and the holistic and here’s how you fix it and so on. I think that they’re trying to reach out to you. Do you work with other business owners that are not necessarily located in Colorado?
Shina Culberson: So we work with business owners across the country. and so ⁓ you know, being here in Colorado, physically in Colorado, is not a requirement for us to work with you. I that’s probably one of the ⁓ the beneficial things that ⁓ that came out of COVID is most people are pretty ⁓ comfortable now with ⁓ using Zoom and doing management interviews over Zoom. If we are working with like a asset heavy, I had a client in Hawaii. ⁓ I should have gone out to Hawaii, but the in ⁓ but you know they can take video of the floor manufacturing floor and send it to us or we can do virtual tour tours as well. But really the best place to find us is just at quizvaluation.com and ⁓ just you know reach out and ⁓ we have a contact form, we have lots of different ⁓ information. I think one of the most interesting things that we have as a free tool on our website is we have a true profitability calculator. ⁓ I think that this is always, you know, one of the very first steps in any evaluation is really understanding what is the true profitability of any company. ⁓ I you know, a lot of business owners put in personal expenses, or maybe there’s one-time non-reoccurring items flowing through the financial statement. So it’s a free calculator. You can go in, say, put in all your numbers, it walks you through, asks you questions, and you can start to get an idea of you know, just even the very first step of what would be required to do evaluation ⁓ is understanding what the true profitability of your company is. ⁓ but that’s a great ⁓ a a a great place to go. And then we walk through depending upon what sort of service you want, there’s we can walk walk through the process of that.
Bob Roark: Well, you also offer one of our previous topics, the Quist Insights Software. Walk me through where that fits, you know, who’s the the right person for that software and what’s the benefit of working with that software.
Shina Culberson: Yeah, so you know, we developed two software products. One is called Spotlight, the other is called ⁓ the advanced assessment. but we really created those because we recognized about ten years ago that not every business owner. necessarily needed a six-week, you know, deep dive, certified valuation that’s gonna have to withstand the scrutiny of the IRS, let’s say. ⁓ so we really wanted to break down the barriers for business owners just to start thinking about business value. How do they start thinking about it? So ⁓ the spotlight tool is just a wonderful place to start. It will you put in two numbers: a revenue number, a profitability. You answer questions around owner readiness, business attractiveness. It takes about 15 minutes. You put your industry code in there, and you can immediately see where your profitability stacks up against your peers ⁓ and what the range of multiple is. for your business based on your profitability and how you answer these handful of questions and see a range of value. It’s a really great sort of just starting place to get the conversation started, to start to understand where you track with peers. And then we always ⁓ recommend that once a business owner has gone through that, they move to the advanced assessment, which is a deeper dive into those specific drivers, intangible drivers of business. So there’s easy to understand stuff. That’s the revenue and profitability. That’s the stuff that we did in that spotlight and how that compares appears. But then the next level of assessment is how do the intangible drivers of a business add to that value? So your customer value, employee value, your organizational position, your market position, your financial management, organizational structure. So we ask a series of questions, the business owner gets a score, they get a recommendation about ⁓ recommendations on how to improve that score. And so they can use that as a true, we think of these as like more planning tools as opposed to valuation, sort of you know, valuation, but your the business owner does get a a range of value, but they’re really great planning tools ⁓ for strategy planning, business planning. ⁓ if for all of our clients who do a certified valuation, they will automatically get the access to our advanced assessment for a year. We’re so committed to helping business owners really not just look at that number, put the valuation report in a drawer, and then not look at it again. We’re we’re so committed in helping the business owner really drive future value. That we’re like, if you do evaluation with us, we’re gonna give you this tool. And this tool is something that they can use ongoing over the course of the year to really hone in on and kind of re and reiterate the aspects of their business that we believe will drive future value for them moving forward. And so when we have our business owners that do our evaluation utilize the advanced tool. when we see them the next year, you know, they’ve executed they they’re more likely to execute and be proactive in their business. And we will see tangible improvements in the number year after year. So we’re just really committed to wanting to help the business owner beyond just giving a number. We really want to have this long-term relationship with them and help them think about future growth.
Bob Roark: You know, all all of this what always strikes me as kind of odd, you know, is all this planning stuff is seems to be focused on exit evaluation. You know, and frankly, it’s all just good business. You know, at the end of the day, you know, all of these things are just hallmarks of well-run best in class businesses in various industry groups. And I think for many of the business owners, they go, I’m really passionate, I built a business, I’m good at it, but they may not be playing in the lane of, I didn’t know the other stuff. I didn’t realize the other stuff. It’s not written down, it’s not recorded, it’s you know, all of those things. And it’s not that they’re not smart people, they just didn’t know what they didn’t know. So for the business owner that’s a couple of years out from exit and still doesn’t really have a handle on what their business is worth, what’s the one sentence that you’d like to leave with that owner to get them going?
Shina Culberson: ⁓ That’s right. Tchau, tchau.
Bob Roark: Yeah.
Shina Culberson: Like I you know again going back to ⁓ so really my one thing would be invest in yourself like just invest in yourself I think so many and again I’m a business owner so I’m guilty of it too. We get business we get busy working in the business that we forget to just invest in ourselves.
Bob Roark: Yeah.
Shina Culberson: Invest in ourselves to work on the business. And it takes a conscious effort to do that. You have to say, Okay, I’m gonna put an hour in my calendar and I in this hour I’m gonna work on the business. I’m gonna invest in myself. And investing in myself means taking the time to really think about what you wanna do with business, what do you want to do after the business? What do you want to do? You know, who’s gonna be that next number. two for you ⁓ in the organization. So that’s what I really encourage. I I encourage everybody from top to bottom in an organization, just take some time, invest in yourself, even if it’s an hour a week, ⁓ just to get out of the minutia of the day-to-day.
Bob Roark: The old on the business stead of in the business, you know, push pull. Yeah. So is
Shina Culberson: Yeah. Yeah. And it’s easier said than done. I know it. I know. Life is busy. Life is really busy.
Bob Roark: Yeah. Yes. You know, Shannon, you we we’ve been talking for a while. Is there anything that I failed to ask you ⁓ about either your business process or potential clients that I should have asked you that I failed to ask you?
Shina Culberson: No, I think you this has been a great conversation. You know, I will just go back to maybe the first sort of question is that you asked me, which is, you know, how does someone select evaluation specialists that’s right for them? I think you do need to interview people. ⁓ I don’t I I know it’s easy for me to say, but I don’t think price should be the number one determinant of how you select
Bob Roark: Mm-hmm.
Shina Culberson: valuation firm. I really think that someone should pick a valuation firm based on the connection that you feel with that firm and understanding how they’re going to work their process, how they’re going to deliver you insights about your business that is beyond a number. Cause if you’re doing valuation right, you should be able to We as an industry should be able to deliver something to the business owner that’s beyond just a number. ⁓ and so ⁓ you know, I think that’s really important. You should you you should talk to someone who specializes in this field and ⁓ that you have a connection with, not just someone ⁓ that’s gonna maybe tell you what you wanna hear, but really be that true partner to give you that kind of unbiased, independent, ⁓ ⁓ feedback. I our clients sometimes, you know, our clients like us because they’re like sometimes, you know, they’ll say, you’re the o you’re the only outside third party that actually sees our business every year. And we rely on you to give us the hard truths. So once, you know, I know it can be done. Like once you kind of get into that habit, then the business owner really wants it. They really want that hard truth because they’re like Okay, you’re the only one that’s going to give it to me with love and kindness and education. And I’ve had business, I’ve had I have one of my very favorite clients. I think I’ve worked with this ⁓ company, they’re on their second sort of a senior management team because it’s been transitioned over time. ⁓ the original Owner that I worked with is still is like 90 years old. He’s still chairman of the board. He still comes in every year. But I now work with that next gen. And they every single year they’re like, Shana, you’re not being hard enough. You’re not being hard enough. You need to be more critical because they really use it as an opportunity to better the company year after year. ⁓ and we see that in the value ⁓ as it’s grown over time. So it can happen. That’s why I think that I’m, you know.
Bob Roark: Yeah.
Shina Culberson: Me personally, I’m not afraid to have those hard conversations because I know that we can get to a place where they’re gonna ask me for it. They’re gonna be like, you be more critical. And it’s sometimes it’s hard. I’m like, well, you’ve got such a great running business now, you know?
Bob Roark: Be careful what you ask for, right? Yeah. You know, I I you know, I I’ve listened to a lot of podcasts and and you and I you were on a podcast earlier that I had years ago. I don’t think that there’s enough known about what value you bring to the table for for a business. I don’t I don’t think it’s well known. I don’t think it’s understood very well. I don’t I don’t know if that’s your reaction, but that’s my reaction after chatting with you.
Shina Culberson: Yeah. Yeah. Well that goes back ⁓ it it takes me a little while to get full circle on some of these thoughts that I have, but you know, I I mentioned ⁓ it’s not just me, it’s my entire team. You know, I think I mentioned originally, ⁓ when the company was founded forty plus years ago, our mission was something like providing the the most detailed high you know, valuation to with strength stand the highest scrutiny. But today, our mission is really to provide actionable insights for business owners and their advisors to improve valuation, performance, and decision making. So that’s really what we are about from myself, for me, all the way down to the team. We know that that is our mission. We want to provide actionable insights. to improve performance valuation in in decision making. So it’s a different approach than just providing that that number that pr you know restands high scrutiny.
Bob Roark: Yeah, I don’t Yeah. Yeah, I don’t think that’s taught anywhere, honestly. I mean, I I don’t think there’s a single degree that you can get that would do that for you. I don’t think. But, you know, Shana, you know, to to kind of bring it to a close, you know, I really appreciate you taking time out of your day, you know, for the insights and observations, you know, and for the founders and pre exit, post exit and the advisors for those founders, you know, I would encourage them to reach out to you, have a conversation.
Shina Culberson: Mm-hmm.
Bob Roark: You know, and go, you know, pros and cons and and make a solid business decision. You know, and so, you know, with that being said, you know, this is the exit series. If you know of a founder who’s sold or is about to, or a broker that’s seen it, or an attorney that’s in the room, you know, send this episode to them. I think they’ll learn a lot from China. And ⁓ for the listeners or whatever, subscribe wherever you ⁓ you know, Spotify or wherever. So China, it’s been awesome. I really appreciate your time.
Shina Culberson: Thanks for the opportunity.
Bob Roark: Yes, ma’am.