Brad Davidson

It all began during "an incredibly boring" City Council meeting back in the late 1980s. Then-councilman Brad Davidson was approached by the city attorney who said, "Hey, Brad, you're a stockbroker, right? Ever work with limited partnerships?" Upon responding in the affirmative, Davidson was asked if he could write an opinion of worth on two limited partnership interests that represented the final loose ends in the settlement of an estate.

Davidson, vice president of investments with Prudential Bache, was happy to oblige. "I wrote these two amateurish valuations," he recalls, "and when I gave them to him, he was so grateful-I was astonished." If one attorney has clients with such needs, he thought, there must be many more of them out there.

Entirely on a whim, Davidson located a magazine called "Probate and Property" with a readership of 30,000 trust and estate attorneys and took out an ad saying, "I will value your limited partnerships. Call Brad." The ad cost $300. Davidson got back $6,000, basically by return mail. "That was the birth of what became SPARDATA," he says.

Davidson grew up in New York City and came to Annapolis in 1973 to attend St. John's College. "I realized that I was not a big city kid," he says. "I was a small town kid. I never moved after that." He worked on Capitol Hill for a United States congressman for three years before embarking on his career in the securities industry in 1981. He began as an account executive with Merrill Lynch, Pierce, Fenner & Smith and worked his way up to vice president of investments with Prudential Bache before setting out on his own with the launch of Securities Pricing And Research, Inc. (SPAR) in 1986.

The premise is fundamentally simple, Davidson says. "We look at a business and say what it's worth. Then we write a 100-page-thick report that not only gives the value of the business but describes how we came to that conclusion."

Most clients purchase the service for one of two reasons: About half are getting the valuation because they plan to sell the business in the immediate future. "It's like selling a house," Davidson says. "You need to know how much it's worth before you hang a sign out." The other half are getting the valuation for estate planning reasons. "They plan to turn the business over to their kids or they're wondering if they will have estate tax issues and if they have enough life insurance," he says.

Over the years, SPARDATA has built strategic partnerships with law firms, accounting firms and financial advisory firms, such as Morgan Stanley, New York Life, MassMutual, PNC Bank and Piper Jaffray. Federal regulatory agencies using SPARDATA's services include the Internal Revenue Service, the U. S. Department of Labor, and the Securities and Exchange Commission.

The company also specializes in what Davidson likes to call "the millionaire next door," alluding to a book which appeared on the New York Times Best Seller List about three years ago. "The fact is that two out of three American millionaires became wealthy, not by investing in Google or investing on Wall Street or through an inheritance," Davidson says, "but because they own a small business-a car dealership, a dry cleaner, a restaurant-average guys and gals." SPARDATA's typical client owns a business with $1 million to $40 million in sales and 10 to 300 employees.

When speaking to business owners, Davidson always says there is not a person in the audience who doesn't have in the back of his mind an idea of what his business is worth. "The news is that the number in your head is wrong," he says, "and probably by at least 50 percent." According to a study done by SPARDATA in 2001, a typical business owner who thinks his business is worth $1 million can be way off in either direction. The business will typically turn out to be worth $2 million or $500 thousand. "The problem is that unless the owner knows the true value, he or she is facing catastrophe," Davidson says. "Owners can be very good at what they do, but tend to be lousy appraisers."

Now recognized as an expert in his field, Davidson spends a good bit of time traveling around the country as an invited speaker to organizations such as the Federal Reserve, the Michigan Bankers Association, the North American Securities Administrators Association and the American Society of Pension Actuaries. SPARDATA's valuation reports have been cited by the Wall Street Journal and other publications as well.

Not all of Davidson's travel is business driven. Last summer, he and his teenage son took two weeks and flew to Seattle, rented a car and drove east. His wife and 11-year-old daughter joined the pair half way. "My son was skeptical, but he survived," Davidson smiles. "He learned that they don't listen to rap music in Montana."

Now that he is no longer on the city council, Davidson is actively involved in Historic Annapolis. From a personal standpoint, he sees the town as a great place to live and raise a family. "It's also a great place to do business because it's so easy to get good employees," he says. "Everybody wants to work here."

A small business owner himself, Davidson acknowledges a lot of very good competitors to whom he refers clients that turn out to be a less than perfect fit with SPARDATA, "and vice versa," he says. While there are many companies that will do business valuations, the industry is actually very fragmented, he explains. "There is no brand such as McDonald's or Ford," he says, "and I suspect that, over time, somebody will create a brand, start consolidating and establish a valuation product that becomes pretty well known -like the Big Mac-the same in California as it is in Maryland."

Aside from wishing he had more hours in the day, Davidson is pretty content with the status quo.setting his own schedule and not having to commute to Baltimore or Washington, D.C. He says, "Being, I think, ridiculously well rewarded financially for doing something that is kind of second nature to me has turned out to be a wonderful way to spend a career." SPARDATA can be reached at or 410-263-2500.


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