ValuAdder Business Valuation Blog

Business valuation tips, updates and advice. Pick up a few suggestions on how to value a business. Feel free to browse the contents or share your thoughts by leaving a comment.

Archive for the 'Company Valuation How-To’s' Category




S corporations are so-called pass through entities. The company itself pays no income taxes. Instead, the shareholders pick up their share of business earnings and put them on their own tax returns. This is big savings compared to the double taxation common with the C corporations. Pre-tax or after-tax earnings for your business valuation? When… Continue Reading



If you are considering valuation of a company, private or public, the choice of valuation methods may seem bewildering at first. Business appraisers and economists recognize that there are three ways to value any company: Asset approach – which looks at the company’s assets and liabilities. Income approach – that establishes the company’s value based… Continue Reading


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


One of the central valuation methods under the income approach is the Discounted Cash Flow technique. To apply this method in your business valuation you would need to work up the following key inputs: Forecast of business cash flows Discount rate measuring the business risk Business long-term value, known as the terminal value While the… Continue Reading


Companies developing security software applications fall within the custom software industry sector. It is classified under SIC code 7371 and NAICS 541512. Information systems security concerns in companies large and small are a major reason this sector of the software industry has experienced rapid growth in recent years. In 2011, over 49,000 US based firms… 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, businesses are appraised 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 to factor… Continue Reading





Valuation multiples lie at the heart of business valuation under the market approach. Each business is different. Yet businesses in the same industry group, of similar size and ownership structure may share a number of important factors that drive their value. If there are enough data on similar business sales, you can estimate the value… Continue Reading


One of the central business valuation techniques under the income approach is the discounted cash flow method. It lets you calculate the business value based on three fundamentals: Business earnings forecast, usually annual cash flows. Discount rate which captures business risk. Long-term business value, known as the terminal value. The standard discounting valuation formula assumes… Continue Reading