Even the most experienced business appraisers get confused on occasion. Do the discount or cap rates apply to valuing minority or controlling business ownership interests? One share of company stock – a classical minority ownership interest Why should you care? Because values of controlling shares of business ownership can be a lot higher than the… Continue Reading
If you are valuing a business, assessing the company’s earning capacity and risk should sound familiar. Risk estimation gives you the all-important discount rate to plug into your business valuation. As a result, you can then use it with the discounted cash flow method. Business appraisers use a number of ways to calculate the discount… Continue Reading
Planning on valuing a business in an international setting? Then consider complying with the International Valuation Standards (IVS). Just about in any jurisdiction where business assets are valued, standard compliance is key and the IVS rules the roost. Investigations that precede your valuation One of the key requirements under the IVS is a properly conducted… Continue Reading
Are you valuing a business and plan to share your appraisal results with other business people or professionals? Then make sure you comply with major appraisal standards especially the USPAP valuation standard rules. Perhaps the most important and best known professional standard governing all kinds of appraisals, including business valuation, is the venerable USPAP. This… Continue Reading
Ask a finance professor about the best business valuation method. The answer will be there are three approaches to choose from. When pressed for a simple answer though, even the professor would admit that nothing beats the market comps for valuing a business. Benefits of market comps in business valuation Just think of all the… Continue Reading
Business people have a number of reasons to get a business valuation. So it’s small wonder that business appraisers have come up with a plethora of services to address their clients’ requirements. Not all business valuation experts offer all the services. For example, many firms specialize in certain areas, such as litigation support or estate… Continue Reading
Having trouble finding a set of business sale comps to figure out what your company is worth? You are not alone. The market approach to business valuation offers undeniable advantages when valuing a company. But it suffers from one flaw – you need to have reliable, current, and transparent business sale comps. Valuing public company… Continue Reading
If your company looks like most businesses, you may have noticed the familiar picture. Some business assets that appear on the books are no longer around. And others that the company uses all the time don’t show up on the records. Business property taxes and business asset values Sooner or later it comes time to… Continue Reading
Discounted cash flow method, or DCF for short, is well known in business valuation. You forecast business earnings, assess business risk in the form of discount rate and calculate business value in present day dollars. But you could also use the DCF method as a great way to calculate your discount rate. To do so,… Continue Reading
Now you must think someone is joking, right? Surely, there is no such thing in business as excess earnings. As the saying goes, the more the better. Don’t get confused though – in business valuation, as in many financial analysis areas, technical definitions make all the difference. Excess earnings – more than a pretty name… Continue Reading
Valuing a business by discounting its cash flows? Guess what’s lurking in the discount rate. Yep, the renowned equity risk premium. Better yet, business appraisers like to drop a formal name for this number – the implied equity risk premium. What is going on? Can you spot the equity risk premium in the discount rate… Continue Reading
Pick up a text book on corporate finance and you will run right into the discounted cash flow valuation method. It is so important that it usually deserves a chapter on its own. Students sweat it, professors hammer in the fundamentals, professionals remember the bruising experience studying the DCF method for years afterwards. Lurking in… Continue Reading
Are you are valuing businesses internationally? Then consider complying with the International Valuation Standards or IVS for short. These standards cover valuation of all types of assets world-wide. For example, businesses, real property, personal business property, market securities and more. In the United States, the USPAP set of standards has long governed appraisals across the… Continue Reading
You heard the old adage, ‘time and tide wait for no man’. None more apt than in business appraisal. You don’t have to go back a ways to see why. Remember the heady days of the Great Recession? Businesses were trembling in anticipation, markets creaked at the seams, and politicians spouted their usual platitudes and… Continue Reading
In the complex world of business valuation keeping things simple may seem a distant dream. Just think about the challenges faced in valuing a company. For instance, analysis of economic conditions, forecasting business earnings, assessing risk, choosing the right valuation methods. And interpreting results that may puzzle the unwary. With so many moving parts, it’s… Continue Reading