The Federal Government of the United States of America Does Not Embrace Corporate Monopolies or Unfair Competition.
"The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."? Franklin D. Roosevelt
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Introduction to the Problem of Unfair Competition and Monopoly Among Certain SBA 7(a) Loan Business Valuation Firms in the United States of America
There are two business valuation firms in the United States whom dominate, with a stranglehold-like grip, the market for SBA 7(a) loan business valuation work.? These two firms are very well known among commercial bankers and the SBA lending community.? One firm is located in Florida and the other in New Jersey.? 99 out of 100 SBA lending professionals can name both of these firms by name just with the information provided above; New Jersey (“NJ”) and Florida (“FL”).? These two firms alone represent a significant, material, grossly excessive and unfairly large majority percentage of all SBA 7(a) loan business valuation work completed for SBA lender U.S. banks and other SBA lenders annually.
There are approximately 800 SBA 7(a) lenders in the United States and it seems apparent to me that every single one of them refers significant valuation work to these two firms; thanks in part to classic herd mentality.? Is this Russia?? Did the United States turn into Putin’s Russia and select NJ and FL to be the American SBA 7(a) lending business valuation oligarchs whom will divide up ALL American SBA 7(a) loan business valuation work among these two firms to create a monopoly within an industry that was created with the expressed written mission statement to support, empower, encourage and provide resources for the American small business community; which is in-fact the very backbone of the American economy, American GDP and the very livelihood of most American citizens.
I am confident that if 798 SBA lenders had their U.S. banking state or national charter and/or SBA approved lender status revoked by Congress, the U.S. SBA, or state governments that this would result in a very large number of SBA lending banks and non-bank SBA lenders being extremely unhappy and filing a great many number of state and federal lawsuits in all 50 U.S. states.? This is exactly the current situation for many fully qualified and well experienced business valuation professionals whom are effectively shut out of this illegally closed market due to an effective monopoly and unfair competition, by only two business valuation firms, that currently exists within the SBA 7(a) lending business valuation market.?
Case in point, below is a link to NAGGL’s list of sustaining members.? The list contains 112 organizations.? Of these, 104 are banks and 6 are law firms; which represents 110 organizations or 98.2% of NAGGL’s sustaining members.? I find this statistic to be surprising given the immeasurably valuable contribution and the critically important knowledge and training source that NAGGL provides to the SBA lending community.? Specifically, it is surprising that 110 organizations are either an SBA lender or a law firm; as I would expect that this list would contain a much greater number of business valuation firms that serve the SBA lending industry.
Moreover, with only two business valuation firms dominating the SBA lending business valuation industry with a vice-grip stranglehold on this industry and the U.S. banks that serve this industry; this creates a statistical intellectual impairment and gross limitation in that the large majority of the work is being completed by a very small group of the same people.? Relatively speaking, should a mere small handful of business valuation professionals essentially be deciding the fair market value of all U.S small businesses obtaining an SBA loan?? A total, or near total, incestuous lack of intellectual diversity is a very bad idea and not a wise or prudent business practice for the SBA lending industry or for borrowers.? Who is to say if they are getting the valuations completed correctly and accurately and in alignment with fair market value if they are the only two valuation firms doing the large majority of the work?? This results in only two valuation firms effectively setting the market price of most U.S. small businesses.? Who is to say if they are correct in their valuation analysis?? Apparently THEY are, since they are doing most of the work and then double checking their work against themselves and their own prior work; by pulling comparable transactions data from business valuation transactional databases that they themselves entered into the database.? WOW, what an ingenious way to always be perfect in your work and ensure that you always get it right.? Do the valuation work, and then ask yourself if you did it right, and then tell yourself that you did.? ????????
A good friend of mine worked for one of these two firms for many years as a senior business valuation professional and he equated the volume of SBA loan valuations being completed by his employer to be analogous to “…gluttonous hogs gorging themselves at the SBA loan business valuation trough.” ?These two firms do not want to hold a fair and reasonable percentage of the SBA loan business valuation market; they want it all and desire to ruthlessly control this market and conduct their business affairs accordingly.? They seek not a reasonable piece of the pie, but rather desire to possess and greedily devour the entire pie themselves.
If the owners of these two firms desired to become filthy rich and earn obscene incomes and acquire immense wealth, why not “man-up” and start a hedge fund, or a dot-com, or go into Wall Street investment banking, private equity or venture capital.? It seems a very odd choice for those seeking to obtain extreme wealth to choose the SBA 7(a) lending business valuation market where the standard market rate average fee per valuation is only about $2,500.? How on earth are you going to obtain extreme wealth doing this type of work…unless you corner the market.? Exactly.?
Make no mistake, the founding officers/shareholders of these two firms, NJ and FL, are multimillionaires and they have accomplished this primarily via providing SBA 7(a) loan business valuations to American SBA approved lenders; because the great majority of the work and revenue of these two firms is strictly SBA lending business valuation work.? There of course is nothing wrong with success, or American capitalism, or becoming wealthy in the United States of America.? However, it does become a major problem, not to mention a violation of federal U.S. laws and therefore illegal, for there to exist a near total monopoly of all U.S. SBA loan business valuation work throughout the entire United States by only two business valuation firms whom I will refer to as NJ and FL.? Everyone in the United States whom works in the SBA lending industry, at any corporate hierarchy level, knows exactly which two firms I am referring to; such that I do not even need to name them and this only serves to prove my point, that currently an illegal SBA loan business valuation monopoly exists in the United States as represented by only two business valuation firms known as NJ and FL.
Below you will find the mission statement of The United States Small Business Administration, followed by a brief introductory excerpt regarding United States antitrust laws such as the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. ????
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The United States Small Business Administration
The mission statement of the United States Small Business Administration (“SBA”) is to "maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters". The SBA was created in 1953 as an independent federal agency to help small businesses start, grow, and build resilience.
The SBA's goals include:
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United States Antitrust Laws
For those of us whom follow current major news events, we know that even Apple with a $3 trillion market capitalization is not at all immune to the below federal laws that have been on the books for well over 100 years.
The below has been sourced verbatim from Wikipedia and is well referenced therein:?
“In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses in order to promote competition and prevent unjustified monopolies. The three main U.S. antitrust statutes are the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These acts serve three major functions. First, Section 1 of the Sherman Act prohibits price fixing and the operation of cartels, and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that may substantially lessen competition or tend to create a monopoly. Third, Section 2 of the Sherman Act prohibits monopolization.[2]?
Federal antitrust laws provide for both civil and criminal enforcement. Civil antitrust enforcement occurs through lawsuits filed by the Federal Trade Commission, the United States Department of Justice Antitrust Division, and private parties who have been harmed by an antitrust violation. Criminal antitrust enforcement is done only by the Justice Department's Antitrust Division. Additionally, U.S. state governments may also enforce their own antitrust laws, which mostly mirror federal antitrust laws, regarding commerce occurring solely within their own state's borders.?
The scope of antitrust laws, and the degree to which they should interfere in an enterprise's freedom to conduct business, or to protect smaller businesses, communities and consumers, are strongly debated. Some economists argue that antitrust laws actually impede competition,[3] and may discourage businesses from pursuing activities that would be beneficial to society.[4] One view suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest.[5] Surveys of American Economic Association members since the 1970s have shown that professional economists generally agree with the statement: "Antitrust laws should be enforced vigorously."[list 1]”
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NJ and FL Are Not SBA 7(a) Loan Business Valuation “Gurus” or “Whisperers”, But Their Percentage of the Market is Grossly Excessive; and Very Likely Constitutes a Great Majority Market Share and Thus Represents Monopolistic Enterprise and Unfair Competition
?NJ and FL have seemingly been able to convince the entire United States commercial banking SBA lending industry that they are the SBA 7(a) loan business valuation gurus, or SBA valuation whisperers, and that they are the SBA loan valuation masters or wizards with the ONLY key and secret handshake/secret knowledge to successful SBA 7(a) loan business valuations; which is utterly absurd, ludicrous, and ridiculous. ?Thus, the entire United States commercial banking SBA lending industry has been brainwashed into thinking that their bank(s) are married to NJ and FL regarding their SBA lending business valuation needs; and not just any marriage, I’m talking about an Irish Catholic marriage that never ends no matter what happens.? This is the one of the biggest fake and false fantasy myths ever perpetrated upon corporate America and an entire major U.S. industry; an industry no less that is extremely vital and critically important to American citizens and the health, strength and resiliency of the America economy and our national GDP. I have heard directly from numerous SBA lenders that these two firms are lacking in responsiveness and in their grasp and competence in valuation in certain industries; yet these lenders continue to refer valuation work to these firms due to some sort of nonsensical cult-like attachment. How does this irrational behavior positively benefit the borrower whose best interests should have utmost priority??
Even Fortune 500 and Fortune 1,000 companies, and even smaller companies, typically switch auditors every few years to avoid any staleness in work quality, or any appearance of impropriety, or lack of objectivity.? Sometimes the board of directors will initiate this and sometimes it is the auditors whom bow out after a few years.? They typically do not remain with the very same auditors for a great many years or even decades; as is exactly and precisely the case involving the SBA loan business valuation firms of NJ and FL.
None of the top leaders, top minds, or intellectual thought leaders in business valuation theory, methodology and overall business valuation standards and guidelines in the business valuation profession work at either of these two firms; NJ and FL. The top leaders that I refer to are the business valuation professionals whom author the authoritative text books, practice guides and teach advanced valuation courses for professional development and continuing professional education. These top leaders do not provide SBA loan valuation work as they are not spending their valuable time completing small business SBA loan valuations for 2500 bucks each. They don’t even turn their calculator on or sharpen their pencil for 2500 bucks. These are people who routinely charge $300-$400 per hour and more; depending on the type of engagement and how much is at stake. These top leaders in the business valuation profession are charging per engagement total fees ranging from tens of thousands to hundreds of thousands of dollars that typically involve large corporate enterprises, high-stakes litigation support expert witness valuation services, or other high fee professional valuation services of various types such as business valuations and economic reports/analysis for taxes, financial reporting, litigation support, shareholder disputes, economic damages, lost profits, intellectual property, marital dissolution and a wide variety of other reasons. ???
I began my career in the business valuation profession in 1995, which means that I have much more depth, breadth and years of experience than every single person whom works at NJ and FL; and that includes the very founders of both of these valuation firms.? I have personally hands-on completed thousands and thousands of SBA 7(a) loan businesses valuations for large and small banks throughout the entire United States and the United States Small Business Administration can confirm this as a true and correct statement-of-fact.? These valuations encompass a very wide variety of industries.?
I will take the business valuation intellectual “Pepsi challenge” with any member at all of the NJ and FL business valuation firms any day, anywhere and at any time.? I have more experience in the business valuation profession than any person that works at these two firms; and that includes the founding officers/shareholders.? I not only have more experience (since 1995) but I also have much greater experience in completing highly complex and intellectually challenging unique business valuation work throughout the entire United States, internationally, and offshore in Hamilton, Bermuda.? I have testified in various courts of law as an expert witness regarding the value of private companies and their shares in a dozen U.S. states.? ?????
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The United States Small Business Administration Was Created to Empower and Support American Small Businesses and the American Small Business Entrepreneur and Was Not Created to Allow the Creation of Business Valuation Firm Monopolies With Massive Revenue, Grossly Excessive Profits, and Unfair Competition.?
We as Americans typically do not like monopolies or unfair competition and that is why there exists numerous federal laws against monopolies and unfair competition.? What has been happening regarding NJ and FL does not just adversely impact my business valuation practice but also many other fellow business valuation practitioners; whom, it is very important to note, are in-fact small business owners themselves. The United States Small Business Administration was not created in 1953 to fuel the boundless greed and the attainment of extreme wealth by two (2) pathologically greedy and self-serving business valuation firms; whom desire to tightly control the market and enrich themselves to an unlimited degree by completing SBA loan business valuations for American small business owners whom they themselves are just trying to get ahead, provide for their family, and attain a piece of the American dream.? Make no mistake, the founding officers/shareholders of these two firms, NJ and FL, are multimillionaires and they have accomplished this primarily via providing SBA 7(a) loan business valuation work to American SBA approved lenders; because the great majority of the work and revenue of these two firms is strictly SBA lending business valuation work.?
I myself am a small business owner, a United States military veteran whom served during a time of war, and I was born in this Country; besides having over 29 years of experience as a business valuation professional whom is a highly qualified and vastly experienced business valuation expert.? I have invested 35 years in total, which is two-thirds of my life, in my work as a business valuation professional; as I have nearly 30 years of experience in the business valuation profession which began in 1995, after investing five years in completing a double major in accounting and finance with a minor in economics.? This 35 years does not even include the extensive time and work required to obtain and complete my CVA and thousands of hours of CPE during the past 29+ years.? I can personally complete a perfect SBA 7(a) loan business valuation of any business, in any industry, under the Sun.? ?
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SBA 7(a) Loan Business Valuation Work is “Baby Valuation Work.”
I am not using the term “baby valuation work” in a negative or derogatory manner.? My point is that SBA 7(a) loan valuation work is the most basic, simplest and easiest valuation work on planet Earth.? I have valued family limited partnerships that are far more complex and challenging than ANY SBA loan business valuation in ANY industry.??
The loan amounts range from $500K to $5 million for a standard size SBA 7(a) loan; therefore these are small businesses by definition, with simple capital structures, a limited number of shareholders that typically ranges from one to two shareholders, and a product/service line that typically consists of one to two main products and/services.? SBA 7(a) loan valuation work is usually quite simple and straightforward and is not complex business valuation work at all; it is truly baby valuation work as there are many other types of business valuation work that are highly complex ?and intellectually challenging in terms of the type of required valuation analysis and data that must be obtained, dissected and analyzed.? SBA 7(a) loan valuation work typically involves simple businesses in simple basic industries such as florists, various types of restaurants and bars, liquor stores, gyms, trucking, hotels, landscaping, beauty salons, medical practices, dental practices, auto repair, chiropractors, drycleaners, mailrooms, accounting firms, law firms, funeral homes, auto dealers, plumbing, home remodeling, electrical and other contractors, child day care, HVAC, accounting firms, construction companies, food stores, gas stations/convenience stores, retail, service, pharmacies, optometrists, vets, etc.? Moreover, the standard of value is fair market value and typically a 100% interest in the business is usually the subject percentage that is being valued; or a partial equity interest or carve out.? This is all very simple and straightforward basic business valuation work and that is why the typical market rate fee ranges from $2,000 to $3,000.??
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To reiterate, the bullets below illustrate that most SBA 7(a) loan valuation work involves simple basic businesses; with the following general characteristics across most industries into which SBA loans are commonly made:
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Below are just a few examples of my personal hands-on experience during the past 29+ years in non-baby, advanced valuation work, completing thousands of various types of highly complex valuation engagements with significant and material valuation fees.? These examples are meant to illustrate and contrast the vastly different complexity in most traditional business valuation work, versus business valuations for SBA 7(a) lending.? I can personally complete an SBA loan valuation in a matter of hours, and I do in-fact mean a perfect valuation, because it is simple and very basic business valuation work and because I have over 29 years of experience in the business valuation profession; such that sitting down and completing an SBA 7(a) loan valuation in ANY industry under the Sun is like breathing to me.? I am as comfortable appraising any business in any industry at all, for SBA 7(a) lending, as Tom Brady is with a football.? Moreover, the reason that I can turn an SBA loan valuation around in 24 hours is because I have over 29 years of experience; in other words 29 equals 24.?
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The objective of the above bullet points is not to toot my own horn but to very clearly illustrate that SBA 7(a) loan valuation work involving small businesses can easily be completed very quickly and perfectly correct and it is not at all necessary that ALL the work in the entire U.S. SBA 7(a) loan business valuation market be completed by NJ and FL whom have incredibly convinced the entire U.S. banking industry that they are THE vitally important SBA loan valuation gurus.? This is an utterly false and fabricated fantasy and is nothing more than creative marketing that has been swallowed whole by the U.S. commercial banking and SBA lending industry.? It is way overdue that the curtain be pulled back to reveal that these are not SBA loan valuation wizards or whisperers; but instead are simply business valuation appraisers and NJ and FL are NOT THE ONLY WELL-QUALIFIED AND WELL-EXPERIENCED BUSINESS VALUATION PROFESSIONALS IN THE ENTIRE UNITED STATES OF AMERICA.? There are many other well-qualified business valuation professionals out there whom are trying to make a living practicing their profession and provide for their families as well; and would like to also do SBA lending valuation work were it not for the monopolistic unfair competition that currently exists represented by NJ and FL.? ??????
Moreover, NJ and FL like to tout that they are experts in the U.S. SBA SOPs; which is more noise and nonsense.? The SOPs are primarily and predominately focused on the work of actual lenders, lender practices, and the underwriting of loans and policies and procedures for lenders regarding SBA lending.? Business valuation professionals have their own governing guidelines and standards that we must follow and adhere to in our work and business valuation organizations such as NACVA, AICPA, ASA, and others are the guiding governing bodies that provide the standards and guidelines to which we must adhere.? The U.S. SBA SOPs are not the primary procedures that guide business valuation professionals in terms of the actual work of business valuation professionals; and that includes business valuations for SBA 7(a) lending.? ???
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A Massive and Shocking Amount of SBA 7(a) Loan Business Valuation Volume Being Completed By Only Two (2) Firms. Approximately 800 U.S. SBA Lenders Collectively Having the Large Majority Percentage of Their SBA 7(a) Loan Business Valuations Completed By Primarily Only Two (2) Valuation Firms
Just for example, let us assume hypothetically, but realistically entirely plausible, that NJ and FL each provide SBA loan valuation services to an estimated 300 banks each; throughout the United States. And, assuming conservatively, that each of the 300 banks sends an estimated average of 50 valuations per year to each of NJ and FL, that equals an estimated average number of annual SBA loan valuations of 15,000.? The figure of 50 valuations per bank, per year, is conservative as the number of annual valuations referred to each of NJ and FL from each of these 300 banks could easily range from 12 valuations per year to 500 per year or more.? So multiplying 300 times 50 equals 15,000, which when multiplied by an average SBA loan valuation fee of $2,500 equals a whopping $37,500,000, for each of NJ and FL; and it is very important to bear in mind that using an estimated average annual number of bank referred SBA loan valuations of 50 makes $37,500,000 a very conservative, but entirely reasonable, gross revenue figure and this figure is very likely much larger.??
Given this massive amount of valuation volume, it is no wonder that it takes 3-5 days or much longer for them to complete a simple SBA loan valuation; when this work should require only 3-5 HOURS, not days.? The reason that it takes 3-5 days is because of the massive valuation volume that they are doing with just about every single SBA lender in America making the brilliant business decision to collectively refer most or all of their SBA loan valuation work to only two (2!) business valuation firms.? These firms could get the valuations turned around faster but that would require hiring additional qualified business valuation professionals; which would increase operating costs substantially and thereby dramatically reduce the personal earnings of the owners/shareholders of NJ and FL and they are far too greedy to let that happen.? ??????
Besides blatantly violating U.S federal law regarding United States Antitrust Laws, what makes this even more egregious is that certain pathologically greedy business valuation professionals have decided to enrich themselves to the level of multimillionaires via a market that is intended to empower, support, enrich and assist American citizens and entrepreneurs in keeping the American dream alive and the American economy strong.? I mean, if NJ and FL wanted to become filthy rich American multimillionaires, why not grow a backbone and go into Wall Street investment banking, or start a hedge fund, or a dot com, venture capital, private equity, or make moves in Silicon Valley or even buy a small company and then build that company’s shareholder value to a targeted exit mass and then cash out as a multimillionaire?? It just seems a very strange path to wealth and riches to decide to monopolize the SBA lending business valuation market in order to become a multimillionaire; which is exactly and precisely the case regarding the founders and shareholders of NJ and FL.?
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Remember That Most U.S. Business Valuation Firms ARE SMALL BUSINESSES and that Monopolies and Unfair Competition are Illegal in the United States of America?
There are many highly experienced business valuation professionals whom are entirely well-qualified in every way and entirely competent to perform SBA loan business valuation work; and most in-fact qualify as small businesses themselves.?
As a final note, I wrote this to shed light on the open secret that primarily only two firms, NJ and FL, dominate in a stranglehold-like manner the SBA 7(a) loan business valuation market in a $27.5 billion industry that was created to "maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters"; and was not created to serve and engorge the unlimited, deplorable, and pathologically excessive greed of only a few individuals. I find it truly disgusting and deplorable as a human being, a business valuation professional, and as an American citizen and U.S. military Veteran who served during a time of war. ? ????
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Sean H. Hayes, CVA - [email protected]
Mr. Hayes is a nationally recognized expert in the business valuation of closely held businesses and securities.? He is exclusively focused on providing business valuation, M&A and capital services to privately-held businesses and their advisors for clients located throughout the United States, offshore and internationally.? Mr. Hayes has over 29 years of business valuation, M&A, capital raising and expert witness litigation support experience and completes hundreds of business valuations and transactions every year, encompassing all types of valuation, capital raising, and M&A transaction advisory; including buy-side and sell-side transactions, SBA 7(a) lending, estate/gift/capital gains taxes, litigation support expert witness testimony, financial reporting, wealth planning, strategic management, exit planning and corporate planning.? During the course of my entire 29+ year business valuation career, I have completed a total of approximately 7,100 expert quality SBA 7(a) loan business valuations for various banks and other lenders located throughout the United States; and this includes a wide variety of industries. ?
Mr. Hayes holds a Bachelor of Science degree with majors in accounting and finance and a minor in economics from Jacksonville University of Jacksonville, Florida; an AACSB accredited business school founded in 1934.? Mr. Hayes is a Certified Valuation Analyst (CVA) and certified member of the National Association of Certified Valuators and Analysts (NACVA).? Worldwide, the CVA certification is held by only around 6,500 valuation professionals and the CVA certification has been accredited by the National Commission of Certifying Agencies (NCCA), the accreditation body of the Institute for Credentialing Excellence (ICE).? Mr. Hayes is a member of the American Society of Appraisers (ASA), the Institute of Business Appraisers (IBA), and a Sustaining Member of the National Association of Government Guaranteed Lenders (NAGGL).? He is also a recognized Insurance Agency Valuation Expert designated by Business Brokerage Press, Inc. and a regular contributor to the Business Reference Guide: The Essential Guide to Pricing Businesses and Franchises.? Mr. Hayes is headquartered in Chicago, Illinois, where he serves clients and their advisors throughout the entire United States and internationally.?
I am available to assist clients, located throughout the United States, with the following matters:? United States SBA 7(a) lending business valuations and SBA loan acquisitions; Marital dissolution with goodwill allocation; business succession and exit planning; estate/gift/capital gains tax purposes; court ordered and other divestitures; capital acquisition services; shareholder buy-in/buyout; mergers and acquisitions transaction advisory; theft of book of business; noncompete violations; shareholder disputes; buy-sell agreements; and ESOPs?
I have provided expert witness litigation support services, including courtroom testimony, in various states; including Michigan, Florida, Indiana, Illinois, California, Colorado, Hawaii, Maryland, Texas, Wisconsin, Ohio, Minnesota, and Iowa.
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Sean H. Hayes, CVA
SBA Loan Expert Business Appraiser
Expert Insurance Agency Appraiser?
225 N. Columbus Dr., Suite?5906
Chicago, IL 60601
904.655.5565
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? 2024, Sean H. Hayes, CVA.? All Rights Reserved.
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