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.

AICPA has finally done it! After years of work, the latest Statement on Standards for Valuation Services (SSVS No. 1) goes into effect on January 1, 2008.

While upholding the substance of the earlier USPAP business valuation and reporting standards, SSVS No.1 introduces several new definitions and requirements for professionally prepared business appraisals.

Business valuation engagements

Professional business appraisers and their clients can choose between two main types of business valuation engagements:

1. Calculation engagement
2. Valuation engagement

The key difference between the two is in the choice of business valuation approaches and methods.

In a calculation engagement, the business appraiser and client agree up front what business valuation methods will be used to calculate business value.

Under the valuation engagement guidelines, the business appraiser is responsible for choosing all the business valuation methods. The appraiser then uses the results from the different methods to come up with the business value – either as one number or a value range.

See an example of how to do this in Step 5 of the business valuation process: reaching the business value conclusion.

Business valuation report formats

Under SSVS No. 1, the different types of business valuation engagements can be reported in a number of formats.

Calculation engagements are reported in a calculation report. Valuation engagements can be reported in either of the two formats:

• Detailed report
• Summary report

Both types of business valuations can be reported in an oral report format.

Here are the key elements that should appear in a Detailed Report:

• Letter to the client which accompanies the report
• Table of report contents
• Introductory sections
• Information sources used in business value analysis
• Non-financial information analysis affecting the business being valued
• Financial statement analysis and adjustment for business valuation
• Business valuation approaches and methods considered and selected
• Reconciliation of the different business valuation method results to conclude business value
• Representation and professional qualifications of the business appraiser
• Supporting information such as appendices and exhibits

With ValuAdder V3.5 business valuation software you have complete flexibility to choose from a number of standard business valuation methods under all three approaches: Asset, Market, and Income.

This enables you to address your specific business valuation needs and meet either the SSVS No. 1 calculation or valuation engagement requirements.

The Business Valuation Report Builder V2.1 includes important language expected of SSVS No. 1 compliant business appraisal reports.

And you can use the power and flexibility of a fully editable Microsoft® Office Word template to complete your business valuation reports in record time!

If you need to present your business valuation results in a professional appraisal report format, you will find that the newly released Business Valuation Report Builder V2.0™ is the tool for the job.

Professional business valuation reports that comply with the USPAP standards 

Starting with a 40+ page report template in the familiar Microsoft® Office Word format, the Report Builder™ takes you through the process of preparing a standards-compliant business appraisal report in record time. And you can create your reports on a Windows or Mac computer.

Here is how the Report Builder™ simplifies creation of your business valuation reports:

• Gives you the power and flexibility of a fully editable Microsoft Office Word template format.
• Covers the essential reporting requirements through compliance with the industry-leading USPAP Standard 10 guidelines.
• Saves you time and makes you more productive. You can create report snippets that can be reused time and again.
• Gives you the freedom to choose the business valuation tools you want. You can use your own spreadsheets – or a set of ValuAdder standard business valuation methods.

The Business Valuation Report Builder™ comes with a powerful feature set to make your business valuation reports stand out:

• Report Creator which generates an unlimited number of fully customizable business valuation report templates.
• User’s Guide which shows you how to create professional business appraisal reports quickly and effectively.
• Extensive Comments which offer helpful suggestions as you complete your report.
• Automatic Fill-In of important details such as the business and client names, business valuation date, and business appraiser credentials.

Prepare professional business valuation reports – and save a bundle! 

If you don’t have Microsoft® Office, the Business Valuation Report Builder™ can also save you money. You can prepare your business valuation reports using the freely available OpenOffice.org office productivity suite!

Another ValuAdder milestone completed – we have just released ValuAdder V3.5.7.

In addition to a number of performance enhancements, we have focused on the key step in your business valuation: financial statement reconstruction.

In valuing a business, the historic financial statements are a starting point. To get an accurate business valuation, you need to adjust your company financials, the process business appraisers call financial statement reconstruction.

To help you get through this important step, ValuAdder provides 3 worksheets, each used for the various business valuation methods:

• Multiple of discretionary earnings
• Business valuation rules of thumb
• Discounted cash flow
• Capitalized excess earnings

The worksheets enable you to start with your company’s Income Statements and Balance Sheet, then consider and make the appropriate adjustments that represent the business earning power.

The worksheets are organized in a sequence of numbered pages, giving you the step-by-step instructions, pointing to the areas requiring your input, and automatically generating the values you can use to calculate your business valuation results with ValuAdder.