For valuation of companies that pay income taxes at the entity level the business appraisal needs to take this into account. In a vast majority of professional business valuations you are likely to see, the local (e.g. state) and national (e.g. federal) income taxes are combined into a composite income tax rate. In the US,… Continue Reading
Asset approach, also known as the cost approach, is one of the three major ways to value a business. Formally, this approach relies upon the economic principle of substitution: The business value equals the cost of recreating an enterprise of equal economic utility. The idea is that two businesses that generate the same economic benefits… Continue Reading
There is a key assumption behind the market comparable valuation methods. These methods assume that the value of a business is revealed once you see what similar companies sell for. If a piece of business equipment has been sold in, say, the last six months for $350,000 then it is likely that we can get… Continue Reading