Business Ownership & Business Valuations – Some Statistics

Dec 2018

As we dive deeper into Business Valuations concepts over the next year, we like to end of the year looking at some business statistics as well as some general statistics as to how and why?

We start off with a chart per the Survey of Consumer Finances (SCF) from the Federal Reserve Board of Washington on household net worth by distribution.

The top one percent and the top 20 percent of all households, in America, have a low debt/net worth ratio, nominal net home equity/total asset ratio and has a significant exposure to all stock (public common stock or private business interests) relative to the middle 3 quintiles. The study above also highlighted key insights such as the highest returns on gross assets were registered by the top one percent of wealth holders, followed by the next 19 percent and then by the middle three wealth quintiles. Maybe the top one percent either had the best insight, read the most, had some of the best advisors or had the best connections; in either case, we present the returns by asset class over the last decade and the last three years, including YTD – September 2018. Please note that these returns exclude dividends/interest and the compounding, thereon, as per our understanding of these returns.

All of this makes sense, since most business owners take different risks and have a higher percentage in business assets and one knows that investments, typically, grow faster than the economy, giving advantages to business owners – see: Going Global – The Gujurati Way & Never Mind the 1 Percent.

Next, we present many of the ethnic group by income and we note that typically the higher earnings ethnic groups have a higher representation in graduate or professional degrees and a higher representation in the financial / management & professional / health-care fields, relative to others. We note that many of these ethnic group form part of our clientele, which is not surprising considering many of them have businesses that are growing. Below, we present, the top 20+ ethnic groups in America, by household income:

Indian American (2016) : $122,026 
Jewish American (2016) : $100,059
Australian American (2016) : $91,452
Taiwanese American (2016) : $90,221
Filipino American (2016) : $88,745
British American (2016) : $79,872
Austrian American (2016) : $78,127
Russian American (2016): $77,841 (2014)
Latvian American (2016): $77,636
Bulgarian American (2016): $76,861
Lithuanian American (2016) : $76,694
Israeli American (2016) : $76,584
Slovene American (2016) : $75,940
Lebanese American (2016): $75,337 
Croatian American (2016): $73,991
Sri Lankan American: $73,856
Scandinavian American (2016): $73,797
Chinese American (2016) (incl. Taiwanese American): $73,788
Belgian American (2016) : $73,443
Swiss American (2016) : $72,823
Iranian American (2016) : $72,733
Italian American (2016) : $72,586

We note that many of the better represented groups have a higher percentage of the population in key fields such as finance, management, medical among others. Furthermore, these groups also have a higher education (graduate and professional degrees), which often lead to higher income, all things equal. Additionally, network effects, which we can classify into two groups, play a factor as well:

  • Location – New York, Greater Toronto Region, Greater Chicago Area, Texas, Florida etc.; and
  • Religions – Jews, Hindus, Presbyterians seem to out earn other religious groups.

Lastly, high technology industries and intellectual property play a key role in wealth and business value affect as the world changes. The regions / cities that are evolving, along with the people, seem to benefit everyone, all things equal.

We also present some of the statistics of the cities, in which we maintain a presence, assisting and growing the local economies:

Toronto West – Mississauga

Toronto East – North York & Markham

Chicago

                                          Source: U.S. Census Bureau, Census 2010 Summary File 1. Esri forecasts for 2017 and 2022.

Miami 

Our service lines are often done for higher net worth individuals, all things equal; Many of whom are well-educated, well-connected, hard working individuals from all walks of life, all of whom own or have some ownership interests in private and/or public businesses. However, we serve anyone and everyone that needs our service.

At Minerva Valuation Advisors, we are trained, as business valuators, appraisers, bankers and financial analysts, in a variety of settings including in tax planning valuations, family law valuations, shareholder disputes valuations and merger & acquisitions valuations and advisory. 

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