Is Intrinsic Value Determined Differently in Ohio’s Cities, Villages and Towns?
There are several different titles besides appraiser for Mr. Dave Horning, a role that’s also referred to as business valuator, valuation specialist, business broker, and a few others. Still, I think the job itself is best summed up by the Corporate Finance Institute, as they simply describe it as “a professional responsible for determining the economic value of a business or company” (CFI, Sept 2023).
When someone in his profession has to determine the intrinsic value of a business, they have to look at (1) the amount of cash flow that company has generated annually in the past, (2) how much they will in the future, and (3) how certain that determined estimated amount of money is.
The Difference Between Ada and Circleville, Ohio
When I first met Dave it was several years ago, and I didn’t know that he was a business appraiser. All I knew was that I was looking for writing gigs on Craigslist in almost every state at least once a week back then (I was living in Boston, Massachusetts at the time) and he was one of the people I ran into online who had a post up looking for editing help.
The book that he needed help with was about sports. Dave was a wrestler back when he was in high school, and he penned a fictional children’s book entitled The Only Thing that reflected that time in his life. The native Ohioan is also a huge football fan, and he referenced The Ohio State Buckeyes a lot whenever we were making small talk between chapters in our fun editing sessions.
So, since Dave does like the game so much, the company from Ohio that I decided to use for an example this time is the historical Wilson’s Football Factory.
Wilson Football Factory is located in the Village of Ada, Ohio, which is about a hundred miles from the City of Circleville where Dave lives. There are of course many people in and around his immediate area who are in need of the services of a good business appraiser every season of the year, and the demand for Dave’s accurate valuations is also needed many miles out in places like Ada.
Everything about these two locations feels the same, because they’re both generally full of cool people. In fact, not too long ago, Ohio was once ranked one of the friendliest places in the United States.
According to one WLWT News Channel Five report, The Buckeye State came in at number 11 on the Big Seven Travel list, noting that most people in the small cities, towns and villages of Ohio have a good attitude, nice manners, and are welcoming and kind to out-of-towners (like Dave was to me).
Seemingly the only difference between Ada and Circleville is the fact that Circleville is a city and Ada is a village. Most people don’t realize it, but there really is a difference between the types of places, and the size and population of a place has a lot to do with how much a company can be determined to be worth by a local appraiser.
Circleville is called a “city”, and the Merriam-Webster definition of the term is “an inhabited place of greater size, population or importance than a town or village” (Merriam-Webster, 2023). The United States Census Bureau puts its population at a little over 14,000 people (the estimate on July 1st of 2022).
The city has steadily grown over the years. If you look back at a decade ago, there were approximately a thousand less residents there according to the bureau.
A town is in the middle size-wise when talking about the three, and its definition is simple, being “a compactly settled area usually larger than a village but smaller than a city”. Ada, Ohio is called a “village”, which the Cambridge Dictionary defines as “a group of houses and other buildings that is smaller than a town usually in the countryside” (Cambridge Dictionary, 2023).
When you look at the population of Ada being just over 5,000 people as of July 1st of 2022 according to the Census Bureau (a number that has actually went down several hundred people since 2010, with about 5,900 people living in the village back then compared to only around 5,200 today), then you can understand why any experienced business appraiser who is looking at the valuation of a company in Ada, Ohio could probably value it lower (depending on the business, it’s history, etc.) than the same type of business in a more bustling place in the state, such as Columbus.
Is The Intrinsic Value of a Company (That’s Located in a Less-Populated Place) Always Low?
Just because a company happens to be in a small region it doesn’t mean that the intrinsic value of that business is going to automatically be low, simply because the population of that area is! This is because a certain type of company may have built up a really good reputation (a wonderful intangible asset), and the location of the company really doesn’t matter a whole lot when determining its worth.
A knowledgeable business appraiser knows that manufacturers like Ada, Ohio’s Wilson Football Factory make a product that has been loved for decades, and is still widely used across the country and world.
So, when determining the intrinsic value of a company like this one that’s located in a place that’s as small as it is population-wise, it’s important to realize that the profit Wilson Football Factory has made in it past is not mainly based on customers or a whole lot of business that’s going on immediately (locally) around this small physical location, The Village of Ada, but from thousands of people and sports organizations large and small worldwide.
Contact Dave Horning Today for Business Valuations in Ohio
In that little village, the company produces a product that reaches customers near and far, loyal customers who don’t seem to be going anywhere or changing their brand of football anytime soon.
In the next part of the story, (you can click here to read it), we will go over what the approximate intrinsic value may be of Ohio’s Wilson Football Factory. In the meantime, feel free to contact Dave Horning today for outstanding business appraisal services in Ohio!
The easiest way to contact Dave for business valuations is by message at his Ohio Business Brokers Association page.
You can just send him a message here.
Or, you can email him at dave@davehorning.com.
