Archive for March, 2013

These days business people do their work on any computing platform they choose – be it a laptop, desktop or a mobile device. For serious business valuation work the two types of systems that come up most often in our experience are Windows and Mac computers and laptops.

Often, your work may be done on a number of computers. For example, you may gather your business data and load your ValuAdder financial recasting worksheets in the office on your Windows desktop computer. Then continue with the business valuation analysis using a laptop at home.

With ValuAdder you have the flexibility of doing just that. Under a single user license, you can install your software on both the office desktop and home office laptop computers. You can share the data between the two ValuAdder installations using your network, mobile storage devices or email.

This flexibility comes in handy if you need to share your business valuation results with partners or other parties located outside your office. For example, a business broker may prepare a business appraisal for a client and take the work to the negotiating table on a site visit.

This way, the results can be discussed with the parties to a business sale transaction during the most appropriate time. You can point out your findings as well as make last minute adjustments as you gather inputs from the parties.

One of the key business tangible assets, inventory is well understood by both business people and appraisers. Businesses determine the value of inventory to close the books on a regular basis. Inventory is a unique type of asset in that it tends to turn over rather quickly flowing to the cost of goods sold on the company’s income statement.

Accountants are used to checking the inventory amounts and determining its value. The fair market value standard is typical when valuing inventory.

Business buyers often prefer high inventory values because they can allocate a greater proportion of the business purchase price to this tangible asset. As the inventory is sold the amount flows directly to the cost of sales reducing the business taxable income.

Another motivation for high inventory values is that less of the business purchase price needs to be assigned to goodwill. Many business owners do not like to carry large amounts of goodwill on the books as investors tend to be rather unimpressed with such financials.

Remember that using the fair market value standard when valuing inventory may help avoid undervaluing this important business asset.