One of the most pressing questions that keeps coming up in business appraisals is the difference between values of companies of different sizes. And anyone can spot a difference between a multi-million dollar corporation and a small main street shop. Ask a professional business appraiser about this. And you will likely hear about the risk… Continue Reading
You may have heard this said about running a business – cash is king. You will find that cash is also important in business valuation. Especially when the calculations involve the income-based methods. The idea behind these valuation methods is to determine the business value based on its earnings generation capacity given a level of… Continue Reading
If the tools and choices confronting you in business valuation seem confusing, take heart – you can get through this by following a number of straightforward steps. Step 1: Gather the relevant data Just like any project, business appraisal requires that you take the time to plan it. So the first step is to gather… Continue Reading
As a business person or professional you may have an idea of what a business is worth. Other people you know and trust may have shared their opinion. Or you may have witnessed a sale of a similar company and noted the selling price. Most owners have a good idea of just how valuable the… Continue Reading
If you need to determine the value of a piece of machinery or business equipment, the market comparable method is the typical choice. The method is easier to apply than in valuations of other asset types such as real estate. Equipment models and makes are readily identified, the serial numbers give you the age of… Continue Reading
Even if you reside in the USA or Canada, your business valuation projects may require that you value a business outside of North America. You may have this question: do the valuation approaches and methods vary based on the business’s location? In fact it does not matter where the business is currently located. As long… Continue Reading
If you are preparing for a business sale or considering investing in an existing business the central question is: how much is the business worth? One of the most useful approaches to answer this question is to look at the current selling prices of similar businesses. Once you gather enough information on what these businesses… Continue Reading
If you are new to business valuation the new concepts and terminology may be confusing at first. Many business people understand the financial information such as income statements and balance sheets. But even for them the language of business appraisal takes a little getting used to. Typical questions about business valuation What is business valuation?… Continue Reading
Whether you are an experienced business appraiser or new to business valuation, you will find plenty of helpful tips and suggestions with ValuAdder. The ValuAdder software comes with a full-featured Learning and Information Center integrated into the Help system. You can get a quick orientation on the business valuation process. Simply click on the Overview… Continue Reading
Before you can use any method for business valuation you need to prepare a number of key inputs that the methods require. Usually, you would start your analysis with a set of the typical business financial statements such as its income statements and balance sheets. But the accounting financial statements are just a starting point.… Continue Reading
One of the key business valuation techniques is comparing your business to recent sales of similar companies. This relies on the valuation multiples derived from business selling prices and financial performance measures of the companies sold. Usually, these multiples are based on the business earnings or asset values, e.g. revenues, discretionary cash flow, EBIT or… Continue Reading
Businesses may have a wide range of intangible assets at their disposal. One important type of such assets that tend to increase in value over time is databases and subscription lists. This is especially so if the lists are assembled one item at a time. Consider a customer database that grows as the business adds… Continue Reading
Under the accounting standards published by the Financial Accounting Standards Board (FASB) two deal with the way business goodwill is handled: SFAS 141 and SFAS 142. Business goodwill is put on the company’s books if management acquires another firm. Under the SFAS 141 and 142 goodwill is tested each year for impairment. This impairment occurs… Continue Reading
Accurate inventory valuation should be high on your list of priorities. Some reasons why: 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… Continue Reading
To answer this question requires a judgment call. Each company needs to make a decision whether to disclose the values of its intangibles depending on its set of circumstances. Under the Generally Accepted Accounting Principles (GAAP) the firms should make available all information that helps investors and creditors understand and forecast future cash flows –… Continue Reading