If you need to determine the value of goodwill of a business or professional practice, the capitalized excess earnings method is an excellent tool. This asset-based valuation method, known as the Treasury method, is especially well suited for goodwill estimation for all types of privately owned companies. Treasury method uses two rates of return One… Continue Reading
If you are valuing a private business for any reason, the market approach should be an essential part of your analysis. There are a couple of methods you can use to establish the value of a privately owned firm: Comparative transaction method Guideline public company method To use the comparative transaction method you basically develop… Continue Reading
Have you considered using the Discounted Cash Flow method in your business valuation? If so, you need to focus on creating reliable business earnings forecasts and assessing its risk. Earnings growth rate effect on terminal value An often overlooked part of the discounted cash flow method analysis is estimation of the long-term business earnings growth… Continue Reading
If you need to get a top notch business appraisal, consider using a number of different business valuation methods. This multi-method approach to business valuation is standard in professionally prepared appraisals. The reason is that each method sheds a different light on business value. Hence, seeing the results from a number of methods gives you… Continue Reading
A common reason business people need to have their business appraised is gift and estate tax situations. Business ownership grants by living owners to family members trigger a gift tax liability. If an owner passes away, the business is inherited by other partners or family members. One rather unsavory chore they need to handle quickly… Continue Reading
If you are valuing a privately owned business, the income-based valuation methods are probably high on your list of tools. To use these methods, such as the Discounted Cash Flow technique, you need to determine the discount and capitalization rates. Income based business valuation methods and company size If you take a look at the… Continue Reading
One of the key elements in business valuation of any size is risk assessment. Whether you use the direct capitalization methods, such as the Multiple of Discretionary Earnings technique, or the Discounted Cash Flow method, you need to calculate the capitalization and discount rates to capture that risk. Business valuation and risk measurement The Build-Up… Continue Reading
How to value a home remodeling contractor business? First, some important industry stats to consider: The home remodeling companies are usually classified within the specialty contractor industry sector under the SIC code 1799 and NAICS 236220. These businesses generate combined annual revenues of $41.96B. There are some 105,000 such firms in the US alone employing… Continue Reading
Quite a few privately owned businesses and professional practices have more than one co-owner partner. And unplanned departure of a partner can have a major effect on the success of a business going forward. To safeguard business continuity, you as business owners need to plan ahead about how to transfer business ownership interests with minimal… Continue Reading
If you are valuing an established company, business goodwill may well be a substantial part of the overall business value. One of the central methods to estimate the value of business goodwill is the Capitalized Excess Earnings technique, also known as the Treasury Method. Business people and financial advisers are sometimes confused by the results… Continue Reading
Biotechnology companies comprise an important and growing industry. You will find these firms classified under SIC code 2836 and engaged in the research, development and marketing of diverse products for the health and bio sciences industries. Over 1,280 such establishments compete in the US alone generating about $24.2B in annual sales and employing just under… Continue Reading
You may come across this situation when valuing a private business. The company owns substantial real estate assets in addition to business operations. By convention, you should appraise the business as though the premises were rented rather than owned. If the company owns its premises and does not pay rent to the landowners, you need… Continue Reading
When it comes to valuing a private business using market-based methods, one valuation multiple that stands out is the price to business revenues. Actually, there are two variants of this distinguished valuation tool: Price to gross revenue Price to net sales In fact, there are a number of industry sectors where the price to sales… Continue Reading
Application software companies are a large industry sector, classified under SIC code 7372 and NAICS 511210. Importantly, the sector encompasses firms engaged in the development, production and marketing of specialized software products. In this day and age virtually all industries rely on some form of business software to power their operations. As a result, the… Continue Reading
Estimation of business value by comparison to similar companies in your industry sector forms the foundation of the market approach. Importantly, many business appraisal experts and business people believe that business value can only be established by market participants – buyers and sellers of business ownership interests. Valuation multiples represent the tools you can use… Continue Reading