Business valuation tips, updates and advice. Pick up a few suggestions on how to value a business. Feel free to browse the contents or share your thoughts by leaving a comment.
Money printing is a monetary policy tool used by the US Federal Reserve (the Fed) to stimulate the economy. While it can provide short-term economic relief, it has long-term consequences that can erode the value of the US dollar. Here’s how: Increased Money Supply When the Federal Reserve prints money, it increases the overall money… Continue Reading
The US dollar, commonly known as the “greenback,” holds a unique and influential position in the global economy. Today it is the world’s primary reserve currency. As such it serves as the dominant medium of exchange in international trade and finance. So what are the history, reasons, and implications of the US dollar’s status as… Continue Reading
There is no better way to lend credibility to your business appraisal than comply with established and widely recognized standards. Two such primary standards often come into play: Revenue Ruling 59-60 and the Uniform Standards of Professional Appraisal Practice (USPAP). Both of these standards are crucial in their respective domains, yet they serve different purposes… Continue Reading
In business valuation, two methods stand out: Capitalized Earnings and Discounted Cash Flow (DCF). Each method brings its unique perspective to the table, offering business people and appraisers distinct lenses through which to view the value of a company. Capitalized Earnings: a snapshot of stability Capitalized Earnings is a valuation method that places a significant… Continue Reading
If you pick up a business appraisal report you are very likely to run across the market comparables or comps used in value analysis. In essence, the comps let you compare the target business to similar businesses that have been sold recently. While this method has its merits, relying solely on market comps can be… Continue Reading
Choosing the appropriate earnings basis for your business valuation is key. One choice made by professionals is the Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). However, like any tool, it has its pros and cons, which merit careful consideration. Pros Isn’t using the accounting EBITDA measure of income enough? Some additional points: Normalization… Continue Reading
You can use business valuation for various transactions, including mergers and acquisitions, investment decisions, and even internal assessments of the company’s value. Among the methods employed in business valuation, revenue multiples have gained popularity for their simplicity and accessibility. However, while revenue multiples can offer you quick insights, relying solely on them can lead to… Continue Reading
For a company a key measure of success is its ability to create a steady and predictable income. In other words, the business must generate desired returns for its owners given an acceptable level of risk. No other business valuation method captures this idea better than the discounted cash flow valuation method. What is Linear… Continue Reading
Creating an earnings forecast can be challenging when the current year is not yet completed, and only partial data is available. In this blog post, we will explore two methods of creating an earnings forecast with a partially completed year: using only historical data, and using proration. Method 1: Using Only Historical Data One way… Continue Reading
In business, meetings of decision makers are often seen as valuable networking opportunities and sources of valuable insights. However, not all gatherings are created equal, and the Davos meeting of elites is a prime example. Perhaps larger corporations may find such events useful. But gatherings of this kind often prove to be irrelevant for small… Continue Reading
Companies in different industry sectors often bear little resemblance to each other. Consider a professional advisory firm and a sporting equipment retailer. So does business valuation by industry follow different rules? The short answer is no. Business valuation methods remain the same regardless of the industry your company operates in. You need to estimate the… Continue Reading
Business valuation is the process of estimating the economic worth of a company. Business people get valuations for a number of reasons, such as mergers and acquisitions, taxation, litigation, and strategic planning. While business valuation relies on a lot of math for analysis, is not an exact science. In fact, it is an area of… Continue Reading
Just about any valuation project is likely to involve the discounted cash flow method. The company value is estimated based on its expected future cash flows and risk. You can use the discounted cash flow analysis to value not just businesses but other income producing assets such as stocks, real estate, projects and much more.… Continue Reading
Businesses recognize the value of contracts if they offer advantages in terms of lower operating expenses, competitive position, or critical asset retention for some period of time. Consider the important types often seen in successful companies: Leases of business premises. Supplier and other vendor agreements. Employment contracts with key staff members. Licensing rights. Franchise agreements.… Continue Reading
When business appraisals come under the scrutiny of courts, lawyers on both sides reach out to appraisers to testify as expert witnesses. Who gets selected? Usually, attorneys tend to pick the professionals who offered such expert opinions in court before. But how does an appraiser get selected for the first time? Clearly, an attorney decides… Continue Reading