Independent financial advisors and wealth managers are well aware that they work in an aging industry full of baby boomers, so it’s no surprise that succession planning is a popular theme in the business. What’s not so popular is the struggle many advisors face when trying to do a quick and painless valuation of either their own practices or their boomer clients’ businesses.
To address that problem, a company called CoreValue Software has developed a web application that asks just 90 minutes of an advisor’s time and uses 18 value drivers to evaluate a business in terms of intellectual property, goodwill, market share, brand, ingenuity and customer relationships. The app assesses a company’s ability to generate future profits, and assigns a core value rating on a scale of 1 to 100.
The point of this exercise, according to CoreValue founder and CEO Chuck Richards (left), is to help advisors assess where a business’ value gap might lie in order to improve enterprise value and thus more effectively transfer a company to a new owner, raise capital or build for the future.
“Core Value Software launched with beta testing in early 2012, and we started to use it with advisors about a year ago in the fall of 2012,” Richards said in a Sept. 5 interview. “We have been rolling it out to the market, and we’re back-testing everything as we add advisors and businesses. We’re measured in the hundreds of businesses so far, not the thousands, but we have very good data.”
The cost of the product is approximately $1,000, although fees vary based on a tiered subscription model.
CoreValue’s web-based business software platform began as a project of Richards’ web tools firm Chairman’s View Inc., based in Richards’ home state of Vermont, in the town of Norwich, which is close to Dartmouth College and its Tuck School of Business.