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.


Sooner or later, this questions pops up for most business people. Whether you are selling or buying a business, hand the reins to a younger generation, seek investment to grow the company, or need to fend off legal challenges, the issue of business value comes up. Most business people have no clue about business valuation… Continue Reading


What? Does the value of business goodwill change depending on the amount of current liabilities carried by the company? It may not sound intuitive, but it actually is true. Consider the well known capitalized excess earnings business valuation method, the go to technique when valuing business goodwill. A trick question: how much capital is committed… Continue Reading


One of the well established business valuation methods, the capitalized excess earnings technique has a long and storied history. The method is described by the United States IRS in its Revenue Ruling 68-609. Unfortunately, the ruling does not specify what it means by the net tangible asset value, a key input into this valuation method.… Continue Reading




If you look at business appraisals whose results differ significantly, the most common reason is the different assumptions. Consider, for example, the discounted cash flow valuation. If a lower discount rate is chosen by the appraiser, the resulting business value may be understated. On the other hand, an unreasonably low discount rate would lead to… Continue Reading



If you ever valued a private company, financial statements normalization or adjustment requirement should sound familiar. This key step is needed in order to reveal the true earning power of the company, the essential element underlying its economic value. Put differently, misstating the financial condition of a business is a major error in business appraisal.… Continue Reading



The key business valuation standard, USPAP (Uniform Standards of Professional Appraisal Practice) states that appraisers must be independent of their client and the business being appraised. Your appraiser cannot have any financial interest in your company and try to benefit himself or herself by coming up with a specific figure. Think about it, would you… Continue Reading


Companies developing a variety of anti-bacterial and virus infection prevention vaccines and similar products form a large portion of the rapidly growing biotech industry. Such firms are classified under SIC code 2836 and NAICS 325414. Currently, there are some 2,010 competitors in this technology intensive industry sector. Together these biotech firms generate over $188B in… Continue Reading


Employee stock ownership plans or ESOPs for short, are a popular way to transfer business ownership while enjoying significant tax advantages. Current owners cash out in a planned, orderly way, while the company’s employees become the new business owners. On the other hand, business owners can sell the company to a third party. Which option… Continue Reading


Most people are familiar with the public stock market. The players are buyers and sellers who are individuals, mutual funds, and financial institutions. Most trades of public company stock are so-called minority ownership transfers involving a small portion of a company’s stock pool. The public stock market is highly liquid, investments are held for a… Continue Reading