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.
If you expect that your business valuation results will be reviewed by tax authorities, you may need to prepare a business appraisal report that meets several key requirements. In the US, for example, the Internal Revenue Service has published the Revenue Ruling 59-60 in 1960. This central publication outlines a number of requirements that a business… Continue Reading
Ask any seasoned business appraiser and you will hear: there are three ways or approaches to measure the value of any business, large or small. True, but there are some big differences between a small privately owned business and a multi-national giant. To get an accurate small business valuation you need to keep a few key… Continue Reading
Retail industry is very large and its well-being is essential to the health of the overall economy. As an example, the retail market segment represented by the US department stores, SIC 5311 and NAICS 452111, has over 3,500 establishments generating just under 76.9 billion dollars in annual revenues and employing more than 534,000 people. Retail businesses… Continue Reading
You can measure the value of a manufacturing firm using a number of well-known methods. Importantly, all of these fall under the market, income and asset approaches to business valuation. However, to get accurate business valuation results you need to focus on two key points. 1. Identify and include all income-producing assets in your manufacturing company… Continue Reading
Food service is big business. In the US alone, over 570,000 eating and drinking establishments generate nearly $375 billion in annual revenues and employ some 6.8 million people. The industry landscape is increasingly dominated by regional or national chains which account for more than 70% of the market. Yet the average restaurant grosses $1,200,000 and… Continue Reading
If you are looking at a business valuation result that just doesn’t make sense, chances are there is a mistake. An error can creep into your business valuation in a number of ways. Here are the top ones to watch out for – and avoid when valuing your business: 1. Choosing the wrong type of business value. Business… Continue Reading
Business people often disagree about business valuation results. Given the amount of money at stake, it is not surprising that the parties tend to view what a business is worth from different points of view. Consider these common situations: Business sale The business seller wants to maximize the selling price and looks to support a higher business value.… Continue Reading
Payback period is the time it takes to recover your original investment. If you are buying a small business, that’s your down payment money. You can use ValuAdder Deal Check tool to factor in your payback period. Here’s how: 1. Your purchase price and terms Enter the purchase price and terms you have in mind. Next, specify the compensation… Continue Reading
Does professional practice valuation differ from other business appraisals? Consider this: Professional practices come in many types: dental and medical practices, law and accounting firms, architecture and engineering consulting companies, individual and business professional consulting firms. While a professional practice may look like a service business, there are key differences to bear in mind that… Continue Reading
Why do you need income statement and balance sheet adjustments before valuing a company? Because the “cost-basis” accounting statements such as the company’s Income Statement and Balance Sheet require adjustments before you can use them in business valuation. Your goal here is to demonstrate the business earning power and economic value of its asset base.… Continue Reading
Small business value is driven by its earning power It will come as no surprise to you that the value of a small business depends on how much money it makes. More so than the market comparisons or the size of the business asset base, its ability to generate adequate income for its owners defines what it’s… Continue Reading
One of the greatest strengths of ValuAdder is its flexibility. You will notice that ValuAdder offers you a number of well-known business valuation and deal structuring tools. With all the tools and business valuation methods available to you, you can make the choices that best fit your particular business valuation, business sale or purchase situation.… Continue Reading
With all the business valuation methods available, you may wonder which ones work best for valuing a start-up business. First, let’s consider the special challenges faced by a young business that affect what it is worth. Conflicting requirements for start-up valuation Unlike an established business, startup companies have little history of financial performance. Frequently a young… Continue Reading
As you know, business valuation depends on a number of key assumptions. Most importantly, your income forecasts for the business influence your valuation results. Your business plan may include a number of such forecasts. Typically, business people have a set of income and expense projections. Because there is no guarantee how the business will perform… Continue Reading
You will hear this advice time and again – if you need to get a solid business valuation, roll up your sleeves and use the Discounted Cash Flow method. Used by professionals to value businesses small and large, this income-based business valuation method has become the de facto standard for precise business valuation. When you use this powerful… Continue Reading