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.
Auto tire retail stores, classified under SIC code 5531 and NAICS 441320, represent around 19,000 establishments in the US alone. Over two thirds of these businesses are small, owner-run single store operations. Check these interesting facts: while the industry as a whole generates over $77bn in revenues, the average store makes around $1,500,000 in annual… Continue Reading
If you are looking to have a business appraised hiring an appraiser is one of the ways to do it. As with any professional engagement the question of costs comes up rather quickly. Not surprisingly, professionally prepared appraisals don’t come cheap; the average hourly rates these days are around $300. A well-done business appraisal takes… Continue Reading
If you are looking at valuing an owner-operator managed small business, then the Multiple of Discretionary Earnings business valuation method should be high on your list of priorities. One of the best examples of the so-called direct capitalization valuation methods, this method determines the value of a business as a multiple of its discretionary cash flow.… Continue Reading
If you ever tried raising debt capital from a bank, you know that lenders base their decisions on business cash flow. In other words, the key consideration is whether the business can repay the loan in full and on time. Lenders build in the risk into the debt service coverage ratio. This gives the bank… Continue Reading
If you own a car wash business or looking to buy one, here is a piece of good news: car washes are one of the most profitable sectors of the service industry with above average profits. These businesses are known to generate steady income due to the necessary and recurring nature of the service they… Continue Reading
Perhaps the greatest advantage of the renowned Discounted Cash Flow business valuation method is its flexibility. You can choose any stream of business income and discount it to determine the business value today. However, to get accurate business valuation results, you need to match your earnings and the discount rate carefully. Net cash flow and… Continue Reading
Companies large and small often realize that they cannot be all things to all people. A business may excel at product development. And yet have little experience in providing specialized services to its customers. A company may have an established position in a regional market place, but lack resources to enter a larger national or… Continue Reading
Construction companies are frequent business acquisition targets. The volume of business sales is largely due to the industry size – there are over 346,000 firms in the single-family housing construction alone, classified under SIC 1521 and NAICS 235510. While this construction industry segment generates over $196 billion in annual sales, the average construction company is… Continue Reading
If you are buying a business or selling your business, estimating the business selling price by market comparison is a good idea. Recent business sales in your industry offer an excellent way to develop your asking price or check your offer price and terms. A number of business pricing multiples to choose from As we… Continue Reading
If you need a bullet-proof way to show what your business is worth, compare it to similar businesses that sold recently. In fact, such business market value comparisons are widely used by business people and professional business appraisers. So much so, that they deserve an official name: Comparative Transaction business valuation method. Market comps and business fair… Continue Reading
Perhaps the most misunderstood part of valuing a business is that business valuation results may differ depending on the assumptions you make, namely: Who needs to know what the business is worth? What are the circumstances surrounding your company valuation? Business appraisers use the formal term business value standard to address this situation. You have… Continue Reading
Even if you keep your company’s financial records in accordance with the Generally Accepted Accounting Principles (GAAP), the value of key intangible assets may not be clear. Unless, that is, these assets were acquired as part of another business purchase. In fact, GAAP rules state that business owners can’t record the value of internally developed… Continue Reading
If you are looking to appraise a business, you have two basic choices: Hiring a professional business appraiser. Doing your business appraisal yourself. Obviously, professional help comes at a price. But what can you expect to spend to get your business appraised? Business appraisers charge by the hour, with average hourly fees being around $300… Continue Reading
When it comes to valuing a business, the business value number you get is always in today’s dollars. In other words, all business appraisals are done in the present. Yet the key goal of business valuation is to assess the company’s earning potential and risk going forward. In this sense, your business appraisal is always… Continue Reading
Most business people expect that an established business is worth more than its asset base. This extra value is known as business goodwill. In other words, you can determine your business value as the sum of its assets plus business goodwill. The accepted way to estimate the value of business goodwill is to capitalize the… Continue Reading