To complement the support for the USPAP and AICPA SSVS No 1 standards, the ValuAdder team has added compliance with the International Valuation Standards (IVS) to our flagship business valuation and reporting solutions, ValuAdder 5 and Report Builder 3.

IVS adoption as the national business valuation standard

Adoption of the IVS as the national valuation standards in Australia, New Zealand, and South Africa as well as IVS incorporation into the national standards in the UK and Ireland has created the need for business valuation tools that help ensure standards compliance in a consistent, flexible yet efficient manner.

Standards compliant valuation system - for professionals and business people

ValuAdder 5 offers a configurable set of recognized methods under the standards-endorsed asset, income and market valuation approaches. All methods enable valuation analysis using the market, investment, fair value and special value bases to calculate the enterprise or equity value of the subject business.

As a result, business analysts, owners and investors can easily create sophisticated multi-method valuations of established firms and start-ups for transactional, litigation, tax, business insurance and financing purposes.

Report Builder 3 features the format and language required to comply with the IVS valuation reporting requirements. Each report created with the Report Builder contains all the elements expected for Standards compliance – and can be easily customized to address any business valuation engagement requirements.

Help with developing standards compliant business appraisals

The integrated ValuAdder Learning and Information Center offers extensive help with developing world-class business valuations along with the compilation of key terms, explanations of concepts, definition of the scope and structure required of any International Valuation Standards-compliant business valuation.

Yet another key milestone for the ValuAdder team - the latest version of the Business Valuation Report Builder tool has been released.

Comply with all major business appraisal standards

Just in time for the upcoming publication of the International Valuation Standards in September 2010, Report Builder V3.0 incorporates a number of important changes aimed at compliance with this important business appraisal standard.

Whether you are a financial analyst or business owner, you can use the Report Builder to create business valuation reports that comply with all three major business appraisal standards:

• International Valuation Standards (IVS).
• Uniform Standards of Professional Appraisal Practice (USPAP), Standard 10.
• AICPA Statement on Standards for Valuation Services (SSVS No. 1).

Business valuation reporting that works world-wide

Ability to simultaneously comply with these appraisal standards means that you can prepare professional valuation reports in just about any jurisdiction. USPAP and AICPA SSVS No. 1 are widely adopted for business appraisals in the US and Canada.

IVS has been adopted as a national business valuation standard in Australia, New Zealand, and South Africa. In many countries the IVS has been made part of the national valuation standard, including the UK and Ireland.

Professional report format - that fits your needs

The Report Builder is designed to save you considerable time and effort when preparing business valuation reports for any situation. Starting with the format, structure and language expected from a professionally crafted appraisal work product, you can quickly edit the initial template to fit the requirements of your specific valuation engagement.

The User’s Guide features extensive explanations of how to create a defensible business valuation report along with the standards guidelines and references. Each report template generated by the Report Builder contains generous comments right at the points in the document that call for your inputs.

You can speed up report preparation by working in the familiar Word or Open Office editor - whether on a Windows or MAC computer system.

Over the recent years we have compiled a wealth of resources on private business valuation and made them freely available to business people and professional advisors like yourself right on this website.

Determining the value of private businesses and professional practices has always been a challenge – both for business people and professionals.

Despite the existence of valuation standards and free data sources of comparable business sales some business people are unaware of these essential resources.

Business appraisal frequently involves judgment calls that are difficult to grasp even for the seasoned analyst. Often the explanation of the terms and methods used in a business appraisal lacks clarity leaving advisors and business people frustrated and confused.

By using the ValuAdder Resource Center you can now gain full understanding of the valuation fundamentals and find the information you need at your own pace. The Resource Center is organized to make this easy and efficient:

Business Valuation Glossary

Here you will find plenty of concise, clear definitions and explanations covering all aspects of business valuation.

Business Valuation Guide

See explanations of the valuation essentials along with examples of using a number of standard methods.

List of Authoritative References

Your will find references to the appraisal standards bodies, sources of business sales data, government resources and professional associations. Helps quickly locate the information you need for valuation engagements, business self-appraisal and effective use of valuation services.

Business Valuation Blog

Take advantage of practical business appraisal examples across a number of industries. There is extensive discussion of valuation techniques and suggestions on best practices that shed the much needed light on the complex appraisal process.

Created for both the business person and seasoned valuation professional, ValuAdder Resource Center is conceived as a go-to reference that:

• Provides you with a thorough yet accessible coverage of the valuation process, accepted methodologies and situations that call for business appraisal.
• Assists you in making the informed choices of which business valuation approaches and tools to use.
• Helps you avoid the unnecessary expense of buying information that is otherwise freely available.

ValuAdder software development team has done it again: ValuAdder 5, our latest business valuation product, is now released for general availability!

Now in its fifth generation, ValuAdder has served over 15,000 business people and professional advisor customers world-wide.

Business valuation on a computer system of your choice

Combining the latest advances in business valuation methodology with the state-of-the-art Java 6 Open Source software technology, ValuAdder 5 is a new breed of business valuation solutions - working seamlessly on all Microsoft Windows, Apple MAC OS, Linux or Unix computer systems.

Much planning and development effort went into making ValuAdder 5 a truly outstanding business appraisal tool.

This 5th generaion product leverages the power of the industry-standard Java computing platform, modern Agile software development and rigorous testing to deliver the precision, stability and security unmatched by any valuation product in the market place.

The result is a full-featured business valuation system that is both powerful and accessible to both novice users and seasoned business valuation analysts.

You will find a set of standards compliant business valuation methods under the Asset, Income and Market approaches that is complemented by the essential tools for structuring a business acquisition and financial decision making - in a single product that delivers performance - at a remarkably affordable price.

Take just a brief look to convince yourself: ValuAdder 5 takes its unique blend of power and flexibility to a new level.

The new Start Tab Screen serves as your Command and Control Center offering instant suggestions on the valuation process, best practice method choices and techniques to organize and complete the business valuation projects in record time.

Our software engineers left no stone unturned

The updated implementation of the Multiple of Discretionary Earnings business valuation method offers real time assistance in risk factor assessment across 14 key financial and operational business performance areas.

The Discounted Cash Flow method supports both automatic and manual earnings forecast generation. The autocalculate feature enables rapid what-if scenario analysis.

Business valuation under the market approach is covered by the market data-driven Market Comps module which provides business value estimation across 420 industries.

ValuAdder features a standard implementation of the Treasury Method to determine the value of business goodwill.

The powerful financial recasting worksheets enable the systematic, highly accurate assessment of the business earning capacity and risk using the standard Build-Up and WACC cost of capital models.

The unique business appraisal system easy enough for the newcomer, powerful enough for the professional

Both new users and professional business appraisers will benefit from the extensive Learning and Information Center and Handbook that are integrated in ValuAdder 5.

Along with the fundamentals of business appraisal, these resources offer Tutorials of business valuation methods, explanations and time-saving examples of how to value a business or professional practice.

Best of breed valuation tools is but one part of the ValuAdder experience. Personal help from ValuAdder business analysts or technology experts is just a mouse click or phone call away.

If you are valuing a business and need to share your results with others, a professionally done business valuation report is a must. To be taken seriously, your business appraisal report needs to be thorough, transparent and follow a set of established guidelines other business people expect.

We have just released the new Business Valuation Report Builder V2.5 to give you the tools you need to prepare professional, standards-compliant business valuation reports. The fully customizable report format follows the important professional guidelines set forth by the USPAP and AICPA SSVS appraisal standards.

To make your report preparation easy, the Report Builder produces pre-formatted valuation report templates that you can customize in the familar Microsoft Word editor.

Helpful comments show you what editorial changes to make and where as you work on your report. An extensive User’s Guide explains the business valuation report preparation fundamentals, gives you references to professional standard requirements and plenty of time-saving tips.

You can easily import your business valuation numbers from ValuAdder business valuation software worksheets or your own spreadsheets. ValuAdder financial recasting worksheets contain a number of data tables detailing the key elements of your business appraisal:

1. Historic company financial statements.
2. Financial forecasts.
3. Normalizing reconstruction of financials to show the business earning power.
4. Risk assessment, including a 10-factor company specific risk evaluation.
5. Discount and capitalization rates that go into your business valuation calculations.

If you need a solid proof of business fair market value, use Business Market Value analysis worksheets to include the valuation multiples and business market value calculations into your Report Builder-generated document. This gives you a way to demonstrate what a business is worth based on a set of key financial factors:

• Business gross revenues and net sales.
• Gross profits.
• Net income.
• EBIT and EBITDA.
• Discretionary cash flow.
• Inventory.
• Furniture, fixtures and equipment.
• Total business asset base.
• Owners’ equity.

Create Professional Business Valuation Reports

We put a lot of work into our business valuation products - so that you can stay ahead of the latest economic changes. If you need an accurate, defensible business appraisal, the latest release of ValuAdder 4.5 gives you the tools for the job:

• A set of business valuation methods based on all three approaches: Asset, Income, and Market.
• A streamlined way to start with your company’s financial statements, recast the historic financials, assess business risk, and calculate your business value. 
• A powerful way to create the right price and terms for a business sale or purchase.
• A comprehensive Learning and Info Center and Handbook covering all aspects of valuing small businesses and professional practices.

What is new in ValuAdder 4.5

We have increased the coverage in ValuAdder business valuation Rules of Thumb to 420 industries! To do so, we have analyzed some 20,000 recent private business sales deals - to give you the most accurate market-based valuation multiples available.

For 2009, we have updated the discount and capitalization rate data - critical to accurate business risk assessment. This ensures that your income-based business valuation results match today’s market conditions precisely.

Market-based business valuation - based on latest market data

Determining your business value by direct comparison to similar private business sales is especially important today. ValuAdder gives you the up-to-date estimates of business value including the statistically derived business value range, average and median values - across each of the 420 industries covered.

You can search and view each Rule of Thumb by the business type description, its industry, as well as the SIC and NAICS codes.

Here are the latest industry additions:

• Fruit, vegetables and preserves manufacturing companies.
• Wineries and spirits manufacturing firms.
• Business form production and printing services.
• Synthetic resins and elastomer products manufacturers.
• Manufacturers of vitamins, health and nutrition products.
• Cosmetics, beauty and hair care product manufacturing firms.
• Paint, finish and coating materials manufacturers.
• Ambulance services.
• Television stations.

Of course, we have reviewed all other 410 industries included in the ValuAdder Rules of Thumb for the latest business pricing trends. Business values in these industries show significant changes in 2009 compared to a year ago:

• Auto parts and accessories manufacturers.
• Moving and storage companies.
• Electrical equipment and other industrial parts distributors.
• Hardware stores.
• Apparel retail.
• Furniture stores.
• Coffee shops.
• Office building, 5-day deli caffees.
• Ice cream parlors.
• Pizza parlors.
• Family restaurants.
• Sandwich shops.
• Cocktail, bar and pub establishments.
• Specialty retail such as gift stores and greeting card shops.
• Flower shops.
• Securities dealers and brokers.
• Insurance agencies.
• Real estate brokers.
• Property management companies.
• Advertising agencies.
• Cleaning services including maid and janitorial companies.
• Packing, shipping and mail box rental businesses.
• Auto repair shops.
• Dental practices, including general family and oral surgery clinics.
• Environmental, engineering and accounting firms.

Business valuation based on income - using the current discount and cap rates

ValuAdder features detailed worksheets that contain the latest information on the discount and capitalization rates. This helps you assess business risk accounting for the broad economic factors as well as the company specific risk. You can use your company’s financial statements to:

1. Determine the available cash flow.
2. Assess business risk.
3. Prepare all the inputs you need for your business appraisal.

Appraise any business - and avoid costly mistakes

The adjustments you make on the worksheets are essential for an accurate business valuation. Applying business valuation methods to incorrect financial inputs is the biggest cause of mistakes.

Owners of small businesses tend to report financials that minimize taxable income. As a result, your business appraisal should focus on cash flow rather than net income. In fact, professional business appraisals use the discretionary cash flow or net cash flow as the basis of determining business value.

ValuAdder worksheets are designed to help you get through this important step quickly and efficiently  -  by making the adjusting addback changes.

Nothing discredits a business appraisal more than using discount and capitalization rates that fail to capture your business risk. ValuAdder helps you assess your company-specific risk using a set of key financial and operational factors.

Business Valuation using ValuAdder

The tradition continues - our customers ask and ValuAdder delivers: the latest release of our business valuation software gives you all the tools you need to value a business or professional practice.

What is new in ValuAdder 4.0.6

We have increased the coverage in ValuAdder business valuation Rules of Thumb to 410 industries. Every Rule of Thumb is statistically derived from latest private business sales.

Valuing a business based on market comps

You can determine the value of a business based on direct comparison to similar privately owned businesses that have sold recently. ValuAdder gives you immediate results providing the business market value range, average and median values based on your selection of the business type and just a few financial inputs.

Here are the latest industry additions:

• Control and measurement instruments manufacturing businesses.
• Data processing, item capture services.
• Document production and distribution companies.
• Document storage, archival and destruction companies.
• Electric services, power generation and transmission service companies.
• Radio, video, data communication equipment manufacturing firms.
• Systems integration services, hardware and software resellers.
• Toy and game manufacturers.

That’s in addition to the other 402 business types across all major industry sectors!

The financial recasting worksheets have been further streamlined to save you time and effort. You can start your business appraisal from the company’s usual financial statement data such as Income Statements and Balance Sheet. The worksheets give you a step-by-step way to prepare for your business valuation:

1. Determine the company’s true earning power.
2. Assess business risk.
3. Prepare all the inputs you need for your business valuation calculations.

Avoiding costly mistakes in your business appraisal

The adjustments you make on the worksheets are key to accurate business appraisal. Using business valuation formulas on incorrect financial inputs is the biggest cause of mistakes in business valuation.

One example is the use of valuation multiples:

Small business owners typically seek to minimize taxable income. Hence, business cash flow is a far more accurate measure of business earning power than net income. Discretionary cash flow or net cash flow are most commonly used in business appraisals.

You need to make several critical adjustments, known as addbacks, to get from the net income to the discretionary cash flow.

For many small businesses, seller’s disretionary cash flow can be several times the net income. If you apply a valuation multiple based on cash flow to net income, the business valuation error can be on the order of 300 - 500% or more!

Another mistake is using discount and capitalization rates that have nothing to do with your business risk profile. ValuAdder lets you assess your company-specific risk - an essential requirement for accurate business valuation.

Business Valuation using ValuAdder

One of the greatest strengths of ValuAdder business valuation software is that it evolves continuously to respond to our customer needs. Our latest product release, ValuAdder V4.0.5 is no exception - by popular demand we have added the following new features:

1. Business valuation Rules of Thumb Tab now provides the standard SIC and NAICS industry classification codes for all 402 industries.
2. Multiple of Discretionary Earnings business valuation result reports the overall earnings multiplier, in addition to the 14 valuation factors.
3. Financial recasting worksheets now let you determine the company-specific risk premium from 10 key risk factors.

As before, ValuAdder Rules of Thumb let you locate the industry of interest three ways:

• By name: with all industries arranged in alphabetic order.
• By industry group: so you can see all related business types for quick comparison.
• By direct search: typing just part of the business description instantly produces all matches. You can quickly narrow down your choices by providing a more specific business description, e.g. specialty retail instead of retail.

Business market value comparison - quick and accurate

Once you have found the industry to do your market comparison, click on the Info button to see the actual SIC and NAICS industry classification codes. Make sure you are using the right industry for your market comparisons!

Business valuation as multiple of its earnings

Multiple of Discretionary Earnings business valuation automatically creates the earnings multiplier based on your assessment of the business across 14 key financial and operational performance factors.

With ValuAdder V4.0.5 your business valuation result now also displays the earnings multiplier value. This important result is also reported in the ValuAdder Earnings Multiple report. If you are creating a business valuation report, include this important value along with your valuation factors.

Assess company-specific risk for accurate business appraisal

If you are using the famous Discounted Cash Flow method for valuing a business, you will find that the accuracy of your business valuation results depends upon the discount rate you use. One of the most important and challenging parts is how to figure out the company-specific risk.

ValuAdder V4.0.5 worksheets introduce a build-up procedure to determine the company-specific risk.

Now you can estimate this important value easily - by ranking the business accross 10 key risk factors:

• Earnings stability
• Financial leverage risk
• Operating risk factors
• Profitability
• Customer concentration
• Product concentration
• Market concentration
• Competitive position
• Quality of the management
• Skill of employees

The result? Quite simply, the most systematic and accurate way to value your business based on the two essential parameters:

1. Business earnings
2. Business risk profile.

ValuAdder raises the bar once again on business valuation software with the latest V4.0 edition.

Now in its 4th generation, ValuAdder has helped thousands of small business people and professional advisors world-wide to determine the value of their businesses and structure successful business acquisitions.

The secret of success? Listening to our customer needs, using the best technology available, passing the savings directly to our customers, and offering world-class support!

With ValuAdder 4.0 we follow this tradition to give business people anywhere the valuation software system that has stood the test of time:

1. Market-derived valuation rules of thumb for over 400 industries. Virtually all business types are now covered!
2. Latest discount and capitalization rates to ensure that your business appraisals are accurate and up-to-date.
3. Worksheets streamlined for quick financial statement recasting and forecasts - an important requirement for any business valuation.
4. Flexible selection of any business valuation method under the standard income, market and asset approaches. You can do what-if scenarios, side-by-side comparisons and custom business valuation method selections with a mouse click.
5. Updated Learning and Info Center covering all aspects of valuing a business and structuring a business sale or purchase.
6. A number of performance enhancements which take advantage of the cutting-edge Java 6 technology features.

The result? Quite simply, the business valuation system that is more accurate, flexible, secure, easy to use and reliable than anything available on the market.

Business market value comps for over 400 industries

For market comps, we have focused on additions in the hottest industries of today. The industry coverage in the ValuAdder Rules of Thumb module is now the impressive 402! You can estimate your business fair market value in just about any industry - by direct comparison to similar business sales.

Here are the latest additions:

Health care services

• Intermediate care facility
• Nursing and personal healthcare services
• Specialty hospitals
• A number of medical laboratory and test facilities

Energy sector and green industry businesses

• Energy management and conservation services 
• Oil and gas production, development and exploration
• Oil and gas well drilling services
• Recycled wood products manufacturing
• Recycled paper products manufacturer
• Metal products recycling
• Metal distributors and service centers

Personal and business finance, insurance

• Personal and consumer credit companies
• Short term business credit, factoring services
• Business credit and underwriting services
• Life insurance carriers
• Accident and health insurance
• Hospital and medical service insurance plans
• Fire, marine and casualty insurance

Information technology services

• Computer facilities management service
• Computer maintenance and repair
• Computer peripherals and software products value-added resellers

Manufacturing industry

• Electronic components manufacturing.

Retail industry

• Radio, television and electronics store.

Educational services

• Private schools, including pre-school, elementary and secondary education levels
• College level and professional training schools
• Junior / associate degree colleges

There are also extensive updates for the restaurant, construction, finance and real estate industries.

If you plan to buy or sell an online business, you will be glad to know that the market for privately owned Web based companies is alive and well.

In addition to many individual business buyers, Internet businesses often attract larger players - corporate buyers and private equity investors. Such business buyers can pay a premium for a growing Internet business in order to realize certain synergies with their business investment portfolio.

In this active market, it is important to measure the value of an Internet business you have created or plan to buy. So what is your business worth?

Internet business market value - directly from the market place

The answer is simple: with all the market bustle, there is plenty of recent data on Internet business sales. You can use these business sale comparables to come up with a quick yet defensible estimate of what your Web based business is worth.

The latest release of ValuAdder business valuation software, V3.5.10, makes this task a breeze. You can calculate the market value range, average and median business values using the valuation formula multiples for a number of Internet business types.

Business Market Values across 420 Industries

Internet business valuation formula multiples available in ValuAdder V3.5.10:

• Online publishers
• Business and consumer e-tail
• Search engine marketing agencies, Pay-per-Click and SEO
• Directory, information and subscription service sites
• Online auctions
• Advertising sites
• Internet entertainment sites
• Website design firms
• Hosting providers and IT services
• Software and technology development firms
• Internet telephony, VoIP
• And many more!

Valuing a Business based on Market Comps

Business valuation for a click-and-mortar operation

If you run an off-line business as well as a website, you can use the market-based rules of thumb to determine the value of a business across 375 industries - including service firms, restaurants, auto repair shops, retail, manufacturing, building contractors, and professional practices, to name a few.

Internet business valuation - 3 ways

Of course, no Internet business valuation is complete without income and asset-based valuation calculations. With ValuAdder, you can cross-check your business market value results using the well-known Discounted Cash Flow, Multiple of Discretionary Earnings and Capitalized Excess Earnings methods to calculate the value of business goodwill and total business value.

Putting together your business sale or purchase

Need to structure the terms of a business sale or purchase? You will find the Deal Check calculation very handy.

If you are an Internet business buyer, ensuring that the terms of your offer make financial sense is key to avoid costly mistakes.

If you are a Web based business owner, structuring effective terms for the business sale keeps you from leaving money on the table.