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Equity Value Enhancement: A Tool to Leverage Human and Financial Capital While Managing Risk


Praise for Equity Value Enhancement

"The foundations of wealth creation and preservation are not as well understood as one might think. It takes special wisdom and a keen grasp of risks and opportunities to master value creation. Dr. Carl Sheeler combines both an analytic knowledge and practical wisdom in Equity Value Enhancement. Carl is able to help advisors and owners avoid the trap of knowing 'the price of everything and the value of nothing' (to quote Oscar Wilde). Carl demonstrates a holistic approach to reflect how financial and human capital, when yoked together, yield uncommon results. A welcome read."
--David Teece, PhD, Chairman and Principal Executive Officer, Berkeley Research Group, LLC

"Equity Value Enhancement represents a distinctive view of valuation presented within a tight, comprehensive context relevant to executives, professional advisors, and business owners that want 'to lead the herd.' In this book, Dr. Carl Sheeler demonstrates his many years of experience and high-level technical expertise reflecting strong quantitative grounding, precision of thought, and high-level insights into risk management and value creation. This highly readable resource reflects a deep understanding of the marketplace and discusses pragmatic approaches to enhancing value and building win-win relationships. This is a must-read for those who truly want to excel and make a difference."
--Thomas J. Handler, JD, PC, Managing Partner, Chairman, Advanced Planning & Family Office Practice Group, Handler Thayer, LLP, Attorneys and Counselors at Law

"At a time when valuation opportunities are becoming more and more commoditized, Carl provides a beacon for service professionals to follow. He identifies a path through the shifting sands of fee negotiations and the hard-core sale of services, as well as outlines the value drivers and best practices in value-added professional services where intangible assets are of primary concern. He provides real solutions for meeting and exceeding the needs and expectations of potential clients as well as their other professional advisors. I can already see that Equity Value Enhancement will become a must-have resource for any practitioner involved in the valuation and business consulting services area."
--Lari B. Masten, MSA, CPA/ABV/CFF, CVA, ABAR, MAFF, Founder and Managing Director, Masten Valuation, LLC, Denver CO

"One of Mr. Sheeler's objectives in Equity Value Enhancement is to challenge appraisers to think differently about their purpose, actions, and outcomes. He integrates several schools of thought in the process, from technical concepts to a more holistic focus on serving in a 'trusted advisor' capacity. It is evident in the specificity of his content--born from decades of experience and thousands of projects--that he has, in fact, achieved this objective. This book is a compelling wake-up call for our profession."
--Brent Uken, CFA, ASA, Principal, Transaction Advisory Services, Ernst & Young

"Why do innovative companies fail to meet their growth objectives? How do generations of equity vanish from successful family businesses? Why do so many acquisitions fail to create the value outlined in the terms of the plan? With Equity Value Enhancement Carl Sheeler has provided a much needed, holistic perspective on risk mitigation, and value growth and preservation. Sheeler's techniques are astute both emotionally and financially. Equity Value Enhancement is as compelling and enlightening as it is authoritative."
--Bill Williams, Regional Sales Manager, U.S. Service Provider, Cisco Systems

CARL L. SHEELER, PhD, ASA, is the managing director and global group leader of family office and business strategies at Berkeley Research Group, LLC--a 900+ staff global business litigation and advisory services firm. He is also the founder of Business Valuations, Ltd./Allison Appraisals & Assessments, Inc. and co-founder of Privatus CI3O Services, LLC. He has performed more than 1,200 high-profile litigation, valuation, and restructuring engagements from midmarket to national companies. He has testified more than 170 times on matters ranging from IRS taxpayer to shareholder disputes and assisted hundreds of clients on the measurement, creation, management, and defense of more than $50 billion in values.
Carl is also a Manager of the Two Bears Ranch, LLC, formed to receive the proceeds from the sale of this book which will be used to serve combat PTSD veterans and at-risk horses and dogs. They will be healed through equine and canine therapy. Donations, grants, and ranch operation revenues will also subsidize this cause. If interested, contact Carl at his website at or

Foreword xv

Preface xix

Acknowledgments xxxi

About the Author xxxiii

Author’s Vision and Challenge xxxvii

CHAPTER 1 Value ABCs 1

Capital and Risk 4

Understanding Assets 5

Plugging the Gap 7

Notes 8

CHAPTER 2 Focus on Trusted Advisors 9

The Path to Being the Best 16

Question Yourself 18

Taking It to the Next Level 19

Notes 22

CHAPTER 3 Focus on Business Owners 23

The Role of Advisors 27

The Cost of Bad Advice 28

The Value of Leveraged Knowledge 29

Engaging the Best 31

Practical Vetting Suggestions 32

Size and Scope Considerations 33

Setting Expectations 34

Note 44

CHAPTER 4 Risk in the Eye of the Beholder 45

Inexperienced Business Appraiser Lenses 47

CPA Lenses 48

Attorney Lenses 51

Investment Banker/Business Broker/Business Intermediary Lenses 52

Commercial Banker Lenses 54

Insurance Professional Lenses 55

Wealth Manager/Financial Advisor/ Fiduciary/Trust Officer Lenses 55

Research on Risk and Returns 59

Economist Lenses 60

MBA/PhD/CFA Lenses 61

Owner/Family Lenses 63

Family Business Advisor Lenses 70

Staff/Vendor Lenses 71

Client Lenses 75

Notes 80

CHAPTER 5 The Role of Governance 81

Governance 83

Focus on Culture 84

About Boards, Governance, and Strategy 85

Healthy Board Governance and Strategy Creates Value 87

Strategy and Equity Value 90

Family Harmony and Legacy as a Governance Driver 93

Board Strategic Direction and Accountability 94

Board Structure and Member Traits 95

Governance and Risk Management 97

Qualitative Value Measures 98

Taking Control 99

The Secret Sauce 101

Governance Measurements 104

Governance Takeaways 106

Notes 106

CHAPTER 6 The Role of Relationships 107

Client Relationships 112

Advisor Relationships 114

Commercial Bankers 116

Investment Bankers 116

Insurance Agents 118

Wealth Advisors 120

Board of Directors 121

The Bottom Line on “Free” Advisors 122

Accountants 122

Attorneys 126

Fractional CFO 127

Family Relationships 128

Shareholder Relationships 129

Vendor Relationships 129

Community/Legislative/Philanthropic Relationships 130

CHAPTER 7 The Role of Risk: Financial- and Legal-Oriented Risk 131

Commonly Missed Risks 137

Final Thoughts 172

Notes 174

CHAPTER 8 The Role of Risk: Operational-Related Risks 175

CHAPTER 9 The Role of Knowledge 241

A Matter of Culture 244

Healthy Knowledge 247

Be Transparent 248

Encourage Two-Way Communication 249

Knowledge and Human Capital 249

Knowledge Measures 252

Notes 253

CHAPTER 10 Valuation versus Value Creation (GRRK) 255

Software and Rules of Thumb 258

A Personal Aside 260

Collaboration, Cohesion, and Transformation 261

Notes 262

CHAPTER 11 Putting It All Together--Four Vignettes 263

Vignette One: What the 2009 Financial Crisis Can Teach Us (It’s about Relationships) 265

Vignette Two: The Trees-and-Forest Syndrome 272

Vignette Three: The Path Not Taken 275

Vignette Four: Putting It All Together (Strategy, Human Capital and Finance) 284

Recommended Reading 313

Index 317