If you need a fact-based, objective valuation of a private company, market-based methods are an excellent choice. These methods help you establish the value of a business in comparison to recent sales of similar firms. The most widely used methods to conduct such market-based valuation are these: Comparative transaction method. Guideline publicly traded company method.… Continue Reading
How to create a chiropractic practice valuation? You hear this question a lot, especially when it comes to buying or selling a practice. First, some industry stats: The US and Canadian governments classify chiropractic clinics under the SIC code 8041 and NAICS 62131 industrial classification codes. Chiropractic practices make up a sizable part of the… Continue Reading
A simple answer: because it has a direct bearing on what the company is worth. The easiest way to see this is to consider how the business value is determined using the well-known Discounted Cash Flow valuation method. The cost of capital is a major input here in the form of the discount rate. The… Continue Reading
You thought the discounted cash flow method was challenging enough. And what about the mid year convention? Let’s review the basics. 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… Continue Reading
It is a standing joke in the business appraisal profession: the business valuation is out of date the moment it is delivered to the client. Business valuation has an expiration date In fact, a key assumption for any business valuation is the date on which it is done. Why is the date so important? Here… Continue Reading
Of all the business valuation methods under the income approach the discounted cash flow technique truly stands out. What makes this method unique? Its solid financial foundation, flexibility in valuing established companies and startups, businesses with steady earnings and rapidly changing profits make this method an excellent choice for appraising all types of businesses. Earnings… Continue Reading
Are you looking for valuation of an employment agency or an executive recruitment firm? Here are some vital industry statistics to consider: Classified under SIC 7361, there are over 36,000 employment agencies of all types and sizes in the US alone. The industry as a whole generates a very impressive $29.9 billion in annual revenues… Continue Reading
Looking for a reliable source of valuation multiples to estimate your company’s fair market value? Before you pay for expensive databases, consider one of the most credible (and free) resources available: government-mandated filings. The Best Source of Company Comparables: Government Filings When public companies acquire private businesses, they are required to disclose detailed information about… Continue Reading
Even in a challenging real estate market quite a few specialized construction companies continue to thrive. The secret of success? Here are a few points to ponder: Construction firms in a specialized, well-protected niche, tend to weather the storm better. Established companies with strong reputation in their market place stay busy even as competitors exit.… Continue Reading
If you need to get an objective estimate of business value, consider using the valuation multiples derived from the recent sales of similar businesses. There are a number of advantages: Business valuation with multiples is easy to understand and explain. In times of economic uncertainty, business people and professional appraisers carefully consider the market trends when valuing… Continue Reading
If you turn to a commercial lender for a business loan, expect the focus to be on the company’s cash flow. In other words, the lender wants to know whether the business will be able to repay the loan from its profits and cash flow. Lender’s view of value: ability to repay plus valuable collateral Just… Continue Reading
Need to get a valuation for a janitorial company? Consider some industry stats: Despite the current economic headwinds, many building maintenance service companies with established client contracts continue to thrive. There are some 92,300 such firms in the US alone, classified under the SIC code 7349. The industry segment contributes an impressive $28B in annual… Continue Reading
With a global focus on sustainable manufacturing, scrap metal recycling is a key growth industry segment. Classified under the SIC code 3339 and NAICS 331419, there are just under 8,200 metal recycling companies in the US alone. The industry as a whole generates some $21.1B in annual revenues and employs close to 75,600 people. Yet an average metal recycling firm is quite small… Continue Reading
Business people often ask us: “Are different business valuation methods used to value companies in different industries?” It is a very sensible question – after all the differences between, say, a manufacturing firm and a dental practice are profound. Professional business appraisers have developed an elegant, powerful framework to deal with this challenge. At the… Continue Reading
Continuing our discussion about valuation of software services companies, let’s focus on the market valuation approach. A central technique under this approach is the comparative transaction method. It is especially useful for valuing private software firms. In a nutshell, the method lets you determine the value of your software firm in comparison to similar companies that have… Continue Reading