With Melissa Gragg
On Episode 81 of The Unique CPA, Randy Crabtree speaks with valuation expert Melissa Gragg. Melissa’s focus is on gathering information about a business from a third party, neutral perspective, in order to help everyone involved in an event where business valuation is an important piece, to feel heard and fairly treated. She goes in depth with Randy about the process and about how regular business valuations can make the sale of a business so much more attractive to outside investors.
Today, our guest is Melissa Gragg. Melissa is a mediator—business valuation expert—based out of St. Louis. She specializes in partner disputes, high net worth divorces with complex financial situations including the valuation of businesses, pension and retirement accounts, tracing separate and marital assets, as well as negotiating the property split. She has almost 20 years of experience valuing over a thousand businesses of all sizes for divorce partner disputes, lost wages, and more. Melissa has been mediating disputes for over seven years, designated as an expert in federal and state courts—so that’s pretty cool—and testified in over 50 litigations, which sounds scary to me. She’s also hosted a couple of podcasts, I think. I’ll ask her that in a second. Melissa, welcome to The Unique CPA.
Thank you. Pleasure to be here.
Well, it’s great to have you here. I think we’re gonna laugh a little bit today. I know, I was on your podcast recently—one of your podcasts—and I recall laughing a lot. I recall having fun. So again, welcome. And we’ll get going here.
Alright. So I talked about your business, I read that bio, which was like, an hour long. Can you truncate that for us?lGive us a little bit, just in layman’s terms, so I understand what is it you do? And what is the name of your business? We didn’t even mention that.
Oh, yeah! So I own a company called Bridge Valuation Partners. And basically, we focus on cases or situations in controversy—so either divorce or a partners’ dispute. And kind of bringing in the valuation into it, we’ve seen, you know, I’ve testified and litigated matters for the past 20 years, but really, in the past decade, we’ve seen it start to shift to mediation and negotiation. And even post-pandemic, you know, we’ve seen things, you know, people want to settle things out of court. And so we really come in as either a joint expert, or an expert hired by one party to provide a value, and then it goes from there. So that’s the long and short. If we need to go to trial, we testify, but for the most part, we’ll try to negotiate a settlement.
Alright, so you get to sit up on the witness chair, and, well, I’m assuming you’re not in court, you’re around the table, or are you in court?
No, we’re still going to court. And we’re doing still kind of hybrid trial situations where you have people that maybe online, maybe testifying online, I’ve been in a court situation where everybody’s in court, and I’m online, I’ve been in situations where somebody could be online. So it’s kind of, it depends on the jurisdiction. Some courts never really did the online process, so you know, it’s kind of like court specific. But it’s definitely a different world. Not everybody goes in person. Some of them aren’t even being held in courtrooms, they’re being held in like office buildings and things like that. So it’s a very unique situation around litigation right now.
Okay. And I’m assuming when there’s two sides, there’s usually two experts. There’s a Melissa—not to your level, I’m sure—but there’s a Melissa on the other side of the table as well?
Well, I think that, you know, for the most part in litigation, whether we’re a partner dispute or we’re getting a divorce, the old adage is, each person hires up an expert, the experts are, you know, just sort of completely in different realms—so you have somebody that’s way high and way low—and it’s really just positioning in order to split it in the middle. When the reality is there’s some psychology and some really, financial psychology around the fact of just having one neutral expert in the middle and kind of helping the parties come to one valuation—maybe even a range of value with which they can negotiate inside of. So you still have both things happening.
It’s just a matter of, you know, I think a lot of people are getting tired of hiring two experts that fight. And you know, they want somebody that kind of comes in the middle and says, “Let’s, you know, there’s a financial reality around businesses, and if we can get to the financial reality, then we can make educated decisions on what we do next” in a partner dispute in buying somebody out, and things like that. Where if you’re just kind of positioning of like, “Let’s get the most that I can and not give up anything,” you’re going to constantly be in that more highly contested litigation that typically results in a lot of money being spent and going to court, and then kind of leaving it up for the judge to decide what happens to your stuff.
So, okay, in this situation, let’s say, you’ve mentioned partner disputes. There is a methodology where they just bring you in, the two of them agree, do they split the fee, because I’m assuming they each have their own lawyers are dealing with or something as well. And they just say, “Hey, Melissa is our person and, and she’s going to give us, and we’re going to start from there.” So I’m just curious. This wasn’t the path I was planning to go on, but now I’m interested!
Well, it’s an interesting path. So usually, you’ll have a partner call, right? One of the partners calls and says, “I’m thinking of buying in or out this other partner.” Maybe they’ve been together for a long time, but one of them’s exiting. Maybe they want, they’ve been alone, and they have a partner entering.
In the case where you have two partners, or multiple partners where one is being bought out, usually the company is going to hire me, on behalf of those several partners. And then I work with all of them to kind of walk them down the financial road of what the value of the business is. Because they’re all going to have their own values in their head, and they’re literally going to, like, hold on to those values, even if there’s no basis in reality, you know? So I’m kind of coming in and saying, “Okay, can we go back to reality? Let’s get everybody.”
And we negotiate the pieces before they see the value. So we’re talking about all the inputs before they actually see the value. And then once you kind of show them the value at the same time, and you talk about those issues before they see the the impact and value, but then when you show them the value, they’re like, Okay, that’s that’s reasonable, like was still negotiate, because there’s always ancillary negotiating things, but nobody can get there until they get their their head around that number. And then they can be like, Okay, what else is there? What else can we negotiate? And I think it it allows people that are a little bit closer in our business, you know, like, we don’t want to fight about it. But we also want the right number. There’s just a difficulty with just talking about that number just together, like, you’re never gonna get to the same number range, right?
Yep. And then everybody starts with a number in their head—an uneducated number just based on what they expect, I’m sure. And then you bring them into reality. So you’re part psychologist, then too, it sounds like, right?
I think it’s huge. I mean, think about it—and CPAs know, this, financial people know this, everything about money, how you grew up about money, your thoughts on risk, about what you will risk money, how you will save, how you will spend—all of those come into play when you’re talking about a business valuation, especially in the context of a divorce. But like a partnership dispute, you know, CPAs have all these brilliant businesses that they are already doing services for. The reality is those business owners want to know “How much is my business worth? Can I sell it today and not work ever again?” Or, really, most people are like, “I’m going to work till I die,” you know. And so you’re wrestling with those things, and usually, that valuation number is something that they don’t ever understand, because every business owner thinks that their business is worth millions more than it may actually be worth.
And let’s go there, then. You just mentioned CPAs a couple of times. Obviously, we’re The Unique CPA podcast. Well, not obviously. I mean, I think our one or two listeners know that we’re The Unique CPA podcast, but all these new people, I wonder, “What did I just tune into? What is this thing?”
But let’s talk about the CPAs. I’m guessing you’re closely working with CPAs on a lot of these engagements that you’re part of. Do your engagements, or do your projects, come from CPAs? Or where does the business come from?
Well, I think that, you know, traditionally in the past, business valuation was kind of derived from the CPA point of view—is that they had these businesses, people were wanting to exit their business, and, you know, “if I just did this additional credential for evaluation, I could understand that process, I could offer those services for Exit Planning.” And so I think what happened was there’s, you know, a finite number of valuation experts around the country, especially that have significant experience, so hiring somebody internal or developing somebody internal isn’t always a great option.
So a lot of times I’ll like, work with a CPA firm or an accounting firm, because I’m not going to offer any other ancillary services. I don’t invest their money. I don’t do their taxes, I don’t do any of those services. So I’m really coming in for just the consulting piece, and to make the CPA smarter about that business, because that interaction, when I come in, and I work with a business owner about their business, that is probably the most intimate that they are going to get from a financial standpoint, with outside people, right? That’s very personal, confidential information.
Well, when I involve the CPA in those discussions, that also increases the CPA’s kind of relationship with that client. They’re not just, “Oh, I see them once a year when they do my tax return.” They’re like, “Oh, they’re coming in and helping me grow this business—they’re helping me get to another level.” And that is really where they cement a relationship even better than they had before, is that they’re talking about the business.
Most of my clients, or a lot of clients in that capacity, will do a valuation every year, because they’re looking at “When am I going to exit? And when am I going to cash out for the most money?” And there are inflection points. And it’s not always when you’re ready to sell, it’s not always when you are wanting to retire. It’s usually before you’re ready, and you have to like, be ready to actually have that discussion with a potential buyer. Or you could flub it up, like, “You don’t know the value of your business?” You know, they’ll be like, “How do you not know the value of your business?” Well, nobody really knows, know until they talk to somebody.
Yep. So you said that some businesses will do this every year? Because the question I was going to ask you is, do you normally come in when this event happens—which I think seems too reactive—rather than before an event happens, so you can be proactive? And like you mentioned, CPAs being the advisor, rather than the reporter—”Hey, let’s just report what happened in this transaction. Okay, here’s what you made.” And being an advisor where they can bring you in, and now we’re going to advise and we’re going to help you, I’m assuming data you give them can help them increase the value on an ongoing basis as well. So is that part of the process?
Well, part of the process is to kind of gauge where they are in comparison to competitors, gauge where they are with the market, right? What is the market paying? What’s your cash flow? Understanding these metrics of what a buyer is going to look for is going to be very important in this process. But then it’s sort of like, they’re typically not being proactive, you know? People, I see a lot of accounting firms also have wealth management firm pieces. So the reality is, when that customer, you know, that client, ends up selling their business, they’re going to come into money that they need to invest in some capacity. So usually, I’ll see the accounting firms kind of being part of that, because they want to invest the money. But the reality is that most of the time—and we do it a little different—is we run numbers.
Like we don’t always put it in a report. We don’t always do a big engagement. Because for the most part, business owners just want like, they’re just like, you know, testing, like, “What is the climate,” right?
And I’ve also advised a lot of people not to do these big valuations in writing, because guess what happens? In three years, the buyer’s gonna come down the road, and they’re gonna say, “Hey, Randy, did you ever get a valuation?” And you’re gonna be like, “Yeah, I worked with Melissa three years ago,” and they’re gonna be like, “Great, can you give us that valuation?” And what’s your answer going to be? “Hell no!”
Okay, well, guess what, now you’re evasive. Now you’re not giving me that information. Now, we’ve already started a negotiation that is starting off on the wrong foot. Because now what I like is my clients will say, “Yeah, I do know the numbers.” And they’re like, “Great, do you have the report?” “No, but we worked with Melissa, and if you want her to go through the valuation with you, you can.”
Now what am I going to do? I’m going to sell that valuation and sell how they are priced in the market. Now pricing something for the market is very different than what a value is for fair market value—strategic value, fair market value—these kinds of constructs are kind of what we look at in the valuation model.
Alright, well, that makes sense. I like the for sure the proactive, and not in writing, because let’s just have an idea. I want a constant idea of what my business is worth. That makes sense to me. I haven’t done this in the past—I probably should have more than I did. But knowing that. My son’s in investment banking, which I’m assuming you work with investment bankers quite a bit as well. And so he’s always talking about, you know, EBITDA and multiples, and I guess let’s talk about that is when you are valuing a business. Is it always based on EBITDA? Or are there different methodologies to figure out this valuation?
Well, the metrics are interesting. So usually, you’re looking at EBITDA and the only reason why people are looking at EBITDA is because it’s kind of a rationally known metric for cashflow. Now, there are obviously people that are out there saying EBITDA is blah, and it doesn’t show us anything. But what you have is you have like a constant metric that you’re trying to compare across that industry or across other industries.
So when we’re looking at cashflow, we’re kind of like, I mean, just think about it. Like, if I buy into something, I want to be able to pay off the debt within five years, right? Or the bank wants to get out in five—you know, whatever it is. So a lot of times people always know this three to five times EBITDA, they’re like, “Well, everything’s worth three to five times EBITDA.” That is where people trend except for when you’re in unique times.
Are we in a unique time post pandemic? Yes. Are we in a unique time near recessions? Yes. Are we in a unique time when you have some catastrophic event? Yes. And so then it kind of just twists all of the information that we would possibly know. Now there are metrics for revenue, but when you’re looking at metrics for revenue—I told somebody the other day, I said, if I have a million dollar business, and I make a hundred grand, and the multiple of value is a million dollars, one times revenue, right? So a million dollar company, but I make cash flow of a hundred grand. So that company’s worth a million dollars, the next company is worth a million dollars, one times revenue, but I make five hundred grand, which company do you want?
I want the five hundred.
Of course you do. Now, there’s still a metric of revenue—the same metric was applied to revenue. One times revenue. But then you look at the EBITDA, and if it’s a five times EBITDA, that company is now worth $500,000, and this company over here is worth $2.5 million. And so now, is it really worth a million based on the revenue? Or is it based on the profitability?
Now then, it really becomes an industry issue. So certain industries like Netflix, like Disney+, like AT&T, they are on a subscriber basis. So the more subscribers they have, the more revenue they have, and they are valued based on revenue. So that makes sense because somebody would want to buy those subscribers, and then plug them into a new app, right?
That’s not the same. So you kind of have to look at industry, and then multiples, and correlate them so that it makes sense.
Okay, let’s talk about that valuation based on revenue, because that’s very common in public accounting. So when CPA firms are going to sell or merge up, they use that multiple of revenue. Is there a reason that happens in public accounting, where maybe it shouldn’t happen? What’s your thoughts on that?
Well, you’re also buying a subscriber base, right?
So you’re buying a book of business. And let’s say you only offer tax accounting. So now you have a hundred clients that you can make a million dollars for tax accounting. Well, I offer other services. I offer business valuation, I offer wealth management, I offer state use tax, you know, I offer tax credit advice, all of these things, right? Well, what happens is on that same subscriber base, I’m going to make the million dollars for taxes, but I can layer on all these other services to an engaged group of clients, and potentially from that same group of clients, I can offer my services and make another million dollars over here and another million dollars over here.
So I’m trying to leverage what I think I can add additional services on to that. Take the other situation, and say, “I’m just doing a business valuation one time, right? I can’t offer any other services, and I have to go and get those clients and replenish them.” So what you have is a subscriber base model in the accounting world, where these people are paying every year for their services, right?
These are—they’re on retainer, basically. So is Netflix. So as Hulu, so is all of those things that you pay on a monthly basis. So when you revert out to other entities that you have to go—and even if you look in the accounting field, you may have certain subscriber-based revenue that is at a multiple of revenue, and other revenue that’s the consulting that is not at a multiple of revenue, it’s at a multiple of profitability. So you’re combining those things, [and] you just see a big picture value.
Okay. Because it is that. I mean, when you are evaluating this business that I’m gonna go purchase, let’s say—we’ll look at both ends for a second I’m gonna purchase. I’m gonna buy this accounting from for the other reasons you say, because they have this one niche, and that niche is going to bring a bunch of potential customers to my other six niches. The seller is going to say, “See what I’m doing for you from this standpoint? You got all this opportunity now the increase all this other revenue.” Me as a buyer, am I going to argue against that? No, I just have your annuity revenue, that’s it, and if I get other business, I get the business. I guess that’s where you come in and you kind of work with them to figure out what is the real potential valuation of this?
Well, the issue is, all of that additional lines are based on the buyer being involved, right? So that strategically, they’re going to make more value when they buy it. When you go to sell it, you’re only going to make that cash flow. So when I go—if I’m a big accounting firm, and I’m buying your accounting firm, right? I don’t need accountants. I mean, like the real accounting, like any company—I don’t need a lawyer, I don’t need the professional services, I don’t need your insurance, I don’t need your location, I don’t need any of your expenses. So I’m looking at a multiple of revenue, because I’m looking at the profitability I’m going to make on that same revenue, and it’s higher than yours. And so I’m not going to pay you on what I can make on your business, I’m gonna pay you on what you have made in your business. Or, if there’s a premium that’s paid, that’s just fluff. That’s based on strategic value, that’s based on sometimes, “I want to buy your firm because I don’t want anybody else to buy it—you’re the best, I will pay more, because you’re amazing,” things like that, that come into play.
You’re talking about me now, right?
Exactly. Randy, You’re fabulous.
Well, thank you. I appreciate that. So there does seem to be a higher multiple going on in public accounting right now. I don’t know if you’ve seen this or not, but it seems to, at least the rumor [I’ve seen] is that people are paying more for CPA firms when they merge in. Partly, it’s—I think this is my opinion, you can tell me if I’m right or wrong—partly it is the personnel because personnel are so hard to find right now. If you have a great staff that I can bring in here, I think that’s important. And partly it’s private equity is starting to invest in public accounting. And they’re thinking that I can take this business and I have all these other service lines now that I can either go merge in another company, and now we have all this potential additional multiples of revenue that we didn’t have before. Have you dealt with CPA firms that have seen this? Or have you heard about this at all?
Well, I think that in general, the mergers and acquisitions arena is all seeing high multiples.
You have a lot of money on the side, you have a lot of private equity that’s sitting on money and needs to invest.
But they’re also—and the body count is a big deal. Like the great resignation is not lost on most businesses. So anywhere where you have heavy personnel, and you have like, committed personnel, people are buying companies to access you know, like, you want to hire one accountant at a time, or you want to buy a company that has 40? Right now we have a situation that’s happening in professional practices, that everybody is overwhelmed by business. So it’s almost survival that accounting firms have to buy other accounting firms, because some of them are not overwhelmed by business, right?
You know, some of it’s going to certain areas, maybe because they’re specializing, maybe because, you know, we’ve all figured out that having a niche, or having some sort of specialization actually does make you more of an expert in that world. And so bigger accounting firms are buying up those specialty practices, and even allowing them to kind of run themselves in some capacity, but have the leverage of the mothership of all those clients that they can also serve those services back up to those clients.
So that’s a lot of what’s happening. Private equity as well. But they have a lot of money on the sidelines, that they need to invest, and they’re looking at the profitability going forward.
Yep. Yeah, it seems really crazy right now what’s going on. But I probably would have said that 25 years ago, too. So it’s probably—it may be different. I think it is different, multiple-wise at least. But at least in public accounting, it just seems like M&A has been a constant my whole career. Maybe it’s accelerated more now, I probably has with all the baby boomers that are leading firms that are getting out. It’s an interesting time for sure.
Let’s go back to CPAs, because I kind of started on this and didn’t finish. But obviously, you work with firms. Do you build relationships with firms so that they can bring your services in? Are you even kind of an outsource partner for firms? What is your normal engagement with a CPA firm? It’s probably not with the firm, I’m assuming?
Yeah, typically, I’ll still engage their clients. Typically, they’re calling me with some sort of issue. It’s usually, I mean, I have worked for probably five of the bigger accounting firms in St. Louis over the course of my career, and so I have a lot of former colleagues at most of the firms. And a lot of times I’m being introduced if there’s a conflict. And so they might have a conflict on like, it might be their client that is in the litigation in some capacity, so they can’t offer those services to that client because it’s an audit client or an accounting client. They also want somebody that they kind of trust is going to step in and do the job right. because a lot of times we’re not working with the CPA to develop the value, like, we’re independently creating the value based on theory, based on the uniqueness of the business, and then we’re working with the accountant to understand the historical reality of what happened, right?
And it’s a big piece of that, is looking back for five years and knowing what happened in those five years. What I’m seeing in M&A is like really successful businesses being approached by buyers, right? And so I think that the more an accountant kind of understands that eventually their client is going to be approached by a buyer—so a lot of times in the past accountants didn’t really want to endeavor into some of this consulting, because they would be afraid they’d lose that client, right? Because “If they sell, I’m not going to do the taxes anymore,” so that’s why they took on those like wealth management roles, and well, “I’ll invest the money.” So that makes sense.
But in some capacity, I’m not a threat. And so I think that anybody should work with—I mean, we have to also get off of this scarcity mindset. Like, if you operate from abundance, there’s always going to be more clients for everyone, and I’m not cannibalizing their clients—they’re not mine. But it’s been more beneficial for me to have really smart business accountant referrals, because in my line of work, a lot of times, you know, they’re coming in, and they’re getting divorced, or they’re separating, or things like that. They need that advisor. And more often than not, I’m seeing the accounting firm only working with the business owner, and not necessarily working with the couple, even if the couple, or the multiple people, are their clients.
I think that’s one thing that the CPA firms can start doing is really making sure that they have contact with all of the people that they work with. Especially in divorce situations, it gets tense when you’ve only communicated with one person, and now it seems like you’re on that person side, right?
So I’m usually coming in as like the third party from the outside, and to keep them—that they can provide the information to both spouses, or they can provide the information to both partners, you know, things like that. So it gets them out of the crosshairs of the fight, and allows them to just maintain their neutrality as just the accountant, right?
Yep. No, I think that’s great. And one of the things you said there,about, you know, having this outsourced opportunity. As CPAs—and I say this a lot—as CPAs, and I am one. Not doing tax and accounting anymore, but doing our specialty tax. As CPAs, we know the tax code exists, we know other parts of accounting, and we know all these different areas that our clients need expertise. We cannot be the expert, even for a thousand person firm, we can’t be the expert at everything. And so it’s very important to build these outside relationships with an expert—you being an expert in this area—that they can bring in and know that their client is going to be treated right.
So this is something I’m actually right now in my head, writing an article that I’m going to probably, I’m trying to get published next week, but it’s this exact topic, and I think it’s huge.
So before I wrap up on this, was there any important issue that I completely skipped over that you want to touch on?
No, I think that, you know, CPAs have a unique situation, and a lot of times they are trying to have valuation firms within their organization. So recently, you know, we’ve been in court against other experts, and they’ve been asked, like, you know, “How many evaluations do you do every year?” And they’ll be like, “Five, or ten, or three.” And I think the problem right now with that is that you know, and we’re doing like a hundred a year, you know. So like, the amount of time it takes us to see what a lot of different things are happening, a lot of different sales, you know, like all of these trends, it’s hard to see when you’re just doing a few. And I think for the accounting perspective, it’s like, “Do we know what we know? Or do we not know things that are going to catch us?”
You know, so I think in that respect, having a good relationship with an outside valu[ator]… You know, like, I do some preferred pricing with certain firms that I do a lot of work for, you know? We kind of, I sometimes will do it so that they are part of it, right? And they make some money from the consulting as well. I think that there’s ways to work together so that it’s mutually beneficial. But also there is a lot of the business acumen about that company in the accountant’s head.
They just don’t, you know, like if they’ve been doing those books for ten years, the questions that I have are not going to be for the business owner. The business owner is going to be like, “I don’t know what happened.” You know, it’s going back to the accountant. So all I’m doing is bringing them into the room and really showcasing to the client that they know all of this Information, and they’re not just doing the tax returns. They really understand what’s happening.
That type of person is going to be more helpful when you go to sell your business, than if you’ve jumped around to 18 different accountants in the past five years, you know? I mean, those are going to be red flags for a buyer as well.
Yep. I agree.
So we talk about red flags. We talk about how to clean up your books. A lot of times I’m coming in and saying, “Hey, you’ve only had your tax returns done. You’d better start cleaning up your internal books. We need to make everything so that it matches. You didn’t pay for that every year. I know. But now we got to get reviewed statements. How about composite,” you know, like, we’re actually selling some bigger services, because to get ready to sell your company, you need to have more professionally done financials, and you need to go back and make sure that they fit so that I’m not—an internal financial isn’t matching the tax return, you know, like, this Mickey Mouse stuff, but [to] a private equity investor is going to be a red flag.
Yep, nope, for sure. And one thing I want to clarify, because you said, you know, you’re in St. Louis, you’ve worked with a lot of firms in the St. Louis area, but you work with firms around the country, because a lot of this you do online as well, correct?
Right. Most everything, I think, the pandemic just escalated things like five years, right?
Like, now a lot of things are done online. I think for the most part, people don’t want something formal, they just need a number. They need to make life decisions, and they get bogged down with like, “Oh, it’s gonna cost me $30,000 to figure out what my business is worth? And then work with an exit planner and da da da da?” Which is fine once they’re convinced to do that. But it’s at the beginning, when you can’t convince them to do anything, and they’re not getting prepared, it’s gonna hurt them in the end.
And so that’s when I think coming in and doing something just, you know, like, people call it “back of the envelope numbers,” running numbers, doing a preliminary, quick and dirty, whatever it is—let’s look at what the cashflow is, and if there’s any issues, and big bogeys.
You have PPP loan issues right now that are arbitrarily moving, you know, I mean, there’s just always going to be issues to deal with, but cleaner books are going to help to sell a company.
And even accountants can’t always convince the business owner to do that. Well, if I can show them, it’s going to mean a difference of a million dollars at the bottom line in some capacity? “Oh, maybe I would spend $1,000 a year to do that extra service, right?” So that’s part of it.
Right. Yep. And being proactive is just huge. That’s something that I talk about just being that advisor rather than a reporter. I don’t want to report what happened—I want to advise and affect what happens in the future. And I think that’s really important.
Well, and I tell them, I was like you guys all watch Shark Tank. You know that when they get up there, the business owners get up there and they don’t know their numbers. They are sliced and diced.
And I was like, that’s what’s going to happen. Like if we start talking about your numbers now and we figure out what the answers are for your, you know, like weird expenses, then you’re gonna have those answers when the buyer comes knocking. Because when the buyer knocks, you have to be ready with all of that information, not like “Oh, hey, I’m gonna come back to you in about three months, I’m going to clean up everything.” They’re not going to be interested.
Like, the deals that are happening now are 30 and 60 and 90 days’ cash deals in the bank, very little due diligence, but that’s because you need to know your numbers. And that’s going to escalate as we continue this kind of buying / selling spree. It’s sort of like the housing market just for businesses. It’s crazy.
Right, that’s what I was thinking.
Alright, so before we wrap up, this is a question I always like to ask at the end. I truly believe you’re the expert now. I can go talk to you about valuation anytime I want. But what we really want to know in addition to that is, what do you do when you’re not valuing the business or something? What’s do you do for fun? What’s your outside of work passions?
Oh, my outside of work passions… Right now, we’re dead in the middle of raising children. So that’s a passion and a job—no, I’m just kidding. That’s my part time job on the side.
I have been with the pandemic, more concerned with like my own mental health and doing things fun with the kids, like actually getting out into nature, actually, you know, reading and doing some of the things that I think in the hustle prior, I was just ignoring, I was just like, “No, go get more business.” And so now it’s kind of shifting to you know, how do you help?
For me, I do a lot of divorce. And so I see a lot of women after divorce, kind of just lost a little bit. So I’ve started to connect resources for after the divorce. Like, how do you get back to figure out who you are, and things like that. So I kind of pull a lot of healers together for a lot of different modalities for women to kind of heal from the process. And so those are some of my passions.
But for the most part, I just like to go watch my kids play sports and hang out with friends and family and do the basic stuff. So try to read, but I also try, like it’s hard to read fun stuff. I’m always like, “Ooh, self help. Oh, business. Oh, oh, oh, you know.”
So that’s a problem I don’t have—I should have that problem, because I never read a business book, and I say this on the podcast a lot—which is not good. I have got one right here, right now, I can show it. I’m going to try to read this.
We as a company handed this out to everybody two weeks ago at a meeting we had. And so I’m going to do my best to read it. But the fun books, the entertainment books? I have no problem doing that.
It’s just the business books. But one—and one is that I read and I’ve said this before, it’s John Garrett, who I’ve become friends with now, wrote this book called What’s Your “And”? And it’s kind of like we’re doing here—let’s talk about what you do that’s not your job, because that makes you who you are. You are not Melissa, the valuation expert. You’re Melissa the mom, you’re Melissa the friend, you’re Melissa, the hang out and enjoy a sports game. So that’s, you know, his way he looks at things. And so I did this before I met him, but that’s the one book that I read, and I talk about all the time, because I recommend it. And that’s another book at the same meeting, we handed that book out to everybody as well.
Mmm hmm. No, I think that’s brilliant.
You have to get John on your podcast.
Yeah, that’d be awesome.
Yeah. Alright. I’ll introduce you to him!
And that is one of my passions. So that’s ValuationPodcast.com. That’s the one that we, that I interviewed you. And we just talk about valuation stuff. But you know, a lot of this is my passion, like getting people divorced under mediation is a passion. Like, I think some things need to change in this world—
—and some things I can do via business, some things I can do via fun, but you know, a lot of good stuff.
Make sure though you have that outside of work passion. Because if you go to retire and your passion is helping people in your business, you’re gonna be wondering, “What am I going to do next?”
Which, I’m sure you won’t. You’ll know what to do.
And when you go home, and your kids are like, “Hey, what’d you do today?” And I was like, “Oh my gosh, I settled a multimillion dollar dispute.” They’re like, “Can we order pizza?” And you’re like, “Yeah, you’re right. It doesn’t really matter, does it?” And I mean, that does keep you humble, because you’re like, you know what, nobody cares, all of those things that you’re doing. Yes, it fuels you. But I did have to work with a coach—a brilliant healing, wonderful coach, and she told me, she’s like, “You have to get to enough. You have to get to what is enough for you to go and enjoy it,” right?
You can’t always be going after it. Because if you don’t enjoy it every day, so I enjoy my life every day.
Not just on the weekends, but every day I try to take some time to be, you know, doing stuff that I love—individually, not even with my kids and my husband and all of that stuff, but like, really fuel my soul to make me whole.
That’s perfect. That’s something I don’t think there’s been a day I haven’t enjoyed what I’m doing in years now. And there’s some point in time where I couldn’t say that, but it’s the last five years at least, that I just, I never feel like I work. I mean, I know it’s a cliché, but I don’t feel like I work a second in my life. I’m just, I get to sit here and talk to you. How’s that work? This is fun.
I know! I had to leave a meeting earlier, and they’re like, “What are you going to do?” And I was like, “I think I’m going to be on a podcast.” And they’re like, “What are you talking about?” I was like, “Lots of stuff. I don’t know, we’ll just figure it out.”
And we are going lots of stuff. As long as we’re going lots of stuff, we’re gonna go one more minute here. Because see, this is the fun part. We’re having the fun part of the episode, because you mentioned this too—mental health and making sure that everything’s good. I was very honored, I was asked to present on mental health yesterday, an online webinar, it was titled, and you kind of mentioned this, and that’s what made me think of it. It was titled, “Mental Health Awareness Beyond Burnout.” It was, I had a great time in that it was a 15 minute presentation by me. And then it was a group discussion. And just to hear all these stories that people shared. I mean, honestly, I had hard time not crying on some of them because some people are dealing with a lot of issues. But being able to do that, and feel like it was making a difference for some people was just awesome. So I agree with you.
I think being in business right now, we are reverting back to like our hustle strategy and all of that, and I think we really, you know, like I’ve tried to say we need to continue to extend grace in any capacity to anybody who needs it. And even when, because in my world and litigation, we just push through, we’re like, “We don’t care.” And I’m like, “Your spouse is in a hospital unconscious. Okay—we don’t need to do this today.”
Like, so it’s really starting to step back and saying, “Does any of this have to happen today? Or can we start to let us all off the hook a little bit?” Because we’re all driving ourselves crazy. And I think that it is stepping back and saying, “I’m not only going to extend grace to you, I’m going to extend grace to myself.”
So some days, like, I do enough, like, this is the most I can do. And then I go back home, and I fill up my own soul. And then I come back, and I do it again. And I think that people are missing sort of that fill up. And so they get so overwhelmed. And, you know, divorce is yucky, some of the stuff is yucky areas, you know, of people having the highest conflict at the worst times in their life. And it is draining for the practitioners, but I think you have to protect yourself in that.
And so a lot of it is spiritual based, a lot of it is mental health based meditation, you know, all of these things, Clean eating, all of these things that we’ve been told that we should do, but they actually do mean a lot to mental health. And we have to start doing it. We have to, I mean, I have to grow up. I’m in my 40s. I guess I gotta grow up and do those things, right? But I think it’s helping and put some perspective on it that we didn’t have.
You know, in the past, if we have a deadline, you make it. I don’t care. You know, I mean, April 15th, everybody’s driven by that. In the CPA, what do you talk to CPAs? They say we basically been in tax season since the pandemic started.
Oh, it’s true. It’s true. The nice thing, and we talked about this yesterday, and now we are going all over the board tangent wise, but that’s why this is fun, we talked about yesterday, is that what they have learned is we can just extend more people. I mean, we have a finite time during tax season. We have extra time after tax season. Let’s just extend. Let’s not make ourselves crazy up until April 15th. Let’s, you know, let’s give ourselves till June 15th, or July 15th, or whatever the day is.
And so I think that’s a big lesson that’s been learned over the last few years that will help hopefully, reduce the burnout in CPA firms and stress. And burnout and stress can turn into mental health issues on itself. It’s not “it,” but it can, so the more we can do to make that relaxed.
Okay, okay, I’m gonna go on. I think that was great words of wisdom from you on how you do things. If anybody wants to reach out to you to find out more information—I know you’ve got multiple websites with podcasts and business and LinkedIn. is there one spot or a couple spots, people should look you up?
Yeah, we have BridgeValuation.com or ValuationMediation.com. But you could probably search “Melissa Gragg” or something like that. But, I usually will talk to somebody about their situation before they engage me, because I want to make sure it’s the right fit. But, a lot of times people just have questions about this complex stuff, and it’s not always complex, you know? So it’s, I’m trying to make things more efficient and easier, but yeah, reach out to me online. You know, Randy, if you get a little bit more like into this podcasting space, like you and I are going to have to start doing Tiktoks. Have they told you about this? Like, are you ready for that?
Well, just so you know, I am on Tiktok now. It has started so yeah.
That is awesome!
I don’t know how many videos are out there. I just film the videos, they put them out. I think I see when they go up, but I’m guessing there’s at least a handful, if not more out there right now.
That is literally like my secret. Like if you read, you know like some people read trash novels or watch trash TV, I just watch Tiktok. And I learn so much—all these hacks that I’ll probably never use. But that is also part of my self care, is watching some some fun social media so I’ll look you up Randy. I’ll find you!
Okay, look it up. It’s probably under Tri-Merit. It’s probably not under my name. I do have a Tiktok account. I don’t think I even told her marketing team that they can tag me or whatever you’re doing Tiktok, I assume you can tag—I have no idea. But I have seen that I’m out there. And yeah, so Tiktok, you I know you have a YouTube we got the YouTube too. So yeah, video.
Oh, and I saw you, you have been doing videos forever. I saw some eight years ago videos out there on YouTube. So you’ve been doing this a while.
Yeah. Really trying.
How do you do that?
Well, people can look you up, Melissa. I had a lot of fun. I appreciate you being on here. And you know what, maybe what we’ll have to do is we’ll do a Tiktok video together somehow. Boom.
We’ll do a “collab.” It’s called like a “collab.”
Is that what the kids call it? Oh, wait, you are one of the kids. I’m the old guy.
No you’re not! I’m trying to be like my kids. And I actually, I read something today, an actual formal brief for a litigation. And they said “that seems suspect,” and I was like, “I think we’re gonna need to change that word—that’s a little young!”
Well, here’s a new term my kids taught me, and they were describing me and I apparently do this: “Humblebrag.” I didn’t even know this term existed, but apparently I do a lot of humblebragging, so.
That’s so that that’s a kid term I get. Well, my kids are in their mid- to late-20s.
Was that a constructive criticism from your kids?
I already knew I do it, so it was like, “Okay, now it just has a name. That’s fine.”
Well, you know, you got to toot your own horn! No one else is gonna do it. So I think it’s perfectly fine.
Well, thank you for your support. Alright, we’re gonna wrap it up again.
Alright. Thanks, Randy!
About the Guest
Melissa Gragg is a business valuation expert with mediation experience and a passion for the psychology of negotiation. Managing Partner at Bridge Valulation Partners for over a decade, she testifies in court, but first endeavors to settle the matter through mediation – one form of ADR, or alternative dispute resolution.
Melissa works with attorneys and other mediators around the country who need a neutral, third-party provider of business valuation, pension valuation, income analysis, tracing of non-marital assets or damage calculations for complex financial matters.
She prepares business valuations for litigation support services and expert witness testimony in cases regarding marital dissolution (divorce), shareholder disputes, commercial litigation, business interruption claims, personal damage calculations, and lost profits.
Melissa earned her Bachelor’s in Business Management from Creighton University in 1997, and her Master’s in Finance from Saint Louis University in 2000.
Meet the Host
Randy Crabtree, CPA
Randy Crabtree, co-founder and partner of Tri-Merit Specialty Tax Professionals, is a widely followed author, lecturer and podcast host for the accounting profession.
Since 2019, he has hosted the bi-weekly “The Unique CPA,” podcast, which ranks among the world’s 5% most popular programs (Source: Listen Score). You can find articles from Randy in Accounting Today’s Voices column, the AICPA Tax Adviser (Tax-saving opportunities for the housing and construction industries) and he is a regular presenter at conferences and virtual training events hosted by CPAmerica, Prime Global, Leading Edge Alliance (LEA), Allinial Global and several state CPA societies. Crabtree also provides continuing professional education to top 100 CPA firms across the country.
Schaumberg, Illinois-based Tri-Merit is a niche professional services firm that specializes in helping CPAs and their clients benefit from R&D tax credits, cost segregation, the energy efficient commercial buildings deduction (179D), the energy efficient home credit (45L) and the employee retention credit (ERC).
Prior to joining Tri-Merit, Crabtree was managing partner of a CPA firm in the greater Chicago area. He has more than 30 years of public accounting and tax consulting experience in a wide variety of industries, and has worked closely with top executives to help them optimize their tax planning strategies.