Ever wonder how valuations of small and large businesses differ from each other? To be sure, some things should be obvious. For example, a big bell weather corporation looks a lot different than a mom and pop shop around the corner. Now compare a single owner-operator professional practice to a multinational firm. A tiny private… Continue Reading
With all the dollar printing going on, many business people wonder: what if the US government fails to repay its mounting debt? What effect would this have on the global financial markets? And, more importantly, how will this affect what my business is worth? Risk free rate of return and discount rate The devil, as… Continue Reading
What are buyouts and dissolutions? And why would you need a business appraisal in these situations? Now most business owners prefer smooth sailing to abrupt shifts in direction of their companies. Once in a while, though, you may face the need to address challenges that call for a change in ownership structure. When this happens,… Continue Reading
To many business people business valuation looks like a big bang event. In other words, it rarely happens and then it’s over. Indeed, appraisers usually do valuations in support of some strategic need, such as selling or buying a business. Also, courts often require appraisals in cases of legal disputes. Moreover, tax authorities use valuation… Continue Reading
Why do you need to keep your business valuation software updated? Because there is no such thing as vintage software. Why not? Here are just a few reasons your business valuation software keeps changing all the time. Market data changes As market conditions change, so do the parameters you should use in your business valuation.… Continue Reading
The CAPM cost of capital model requires no introduction. It is used by business appraisers, savvy investors, and even the general public on occasion. Ask your friendly securities broker about betas. You will be regaled with a list of investment prospects with different levels of risk and return, along with the beta number for each… Continue Reading
You may wonder how a casual check on business value differs from a professionally prepared business appraisal. For instance, out of curiosity business people may run a quick and dirty calculation to ball park the value of their company. But when business people approach their professional advisors for help, business valuation takes on a whole… Continue Reading
Once in a while in a life of many businesses a ‘bad actor’ manages to cause harm. Enough to disrupt business operations and lead to a loss of earnings or even a long-term business damage. Unsurprisingly, business owners take a dim view of such actions and bring a legal action to redress the injury. In… Continue Reading
You know the drill – buying and selling shares of stock in public companies is just a mouse click away. You pick up a few shares you like, hold on to them as long as you want, then unload them if you like the current market price. Sounds easy enough, but here is a trick… Continue Reading
Struggling to understand how the capitalized excess earnings valuation works? You are not alone. With quite a few ‘moving parts’, this venerable valuation method has tripped even the most experienced business appraisers. But it does not have to be intimidating. Let’s dissect the enigma by stepping through the calculations step by step. First, note the… Continue Reading
Tired of blowing wads of money on overpriced database subscriptions? In business valuation, like in many things, the devil is in the details. Without a thorough work up of the cost of capital you can’t get usable discount and capitalization rates. Slick data brokers would have you believe that they somehow create the market data… Continue Reading
If there is one professional endeavor that has a lot of proverbial moving parts, it is business valuation. Small wonder you face a number of standards that govern how you should do your business appraisal. The accountant’s standard – AICPA SSVS No 1 A relative new comer to the field is the Statement on Standards… Continue Reading
Business sales tend to drop during economic downturns. None more so than in the midst of a world wide pandemic affecting all customer facing companies. Are you are doing business on the Web? Then your customers may be distracted dealing with a host of problems caused by the troubled economy. Business sale comps It is… Continue Reading
When all hell breaks loose, you may wonder: how does it affect your business valuation? Apart from broken windows and missing merchandise spirited off by those who thrive on turmoil, what do social upheavals do to business value? Good question. Let’s take a look at the fundamentals. No matter what causes the stir in the… Continue Reading
Once in a while you run across business valuation projects that must defer to special requirements. Sometimes they appear to be in conflict with major business valuation standards. As an example, your local court may call for just a market based business valuation even though the USPAP or International Valuation Standards (IVS) expect you to… Continue Reading