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 are valuing a business, considering the economic climate the company operates in is key. Broad national economic data helps shed light on people’s inclination to spend money on products and services offered by the firm. Nationwide economic trends also help you assess how the company’s profit margins are likely to be affected in… Continue Reading
Ask any seasoned business appraiser and you will hear that business value is about future expectations. Business people invest in companies because they expect returns on their investment. Business historic performance is only interesting in so far as it enables you to estimate future returns. Opportunity cost – making your best investment bet Financial gurus… Continue Reading
Are you suspecting the value of a business has been overstated? If you run across a business whose value seems to be too good to be true, you may be right. Business valuation relies upon the estimates of business earnings. And inflated earnings could easily wind up causing business value to be overstated. While reasons… Continue Reading
Whenever you run across a business appraisal for a privately owned company, the choice of discount and capitalization rates pops up. These parameters let you assess company risk, an essential element of valuing any business. The income based business valuation requires that you provide an accurate estimate of business earnings along with the discount and… Continue Reading
Do you use software tools for business value analysis? If so, be sure your software vendor keeps it up to date. You may find that some software fails to meet the ever increasing demands in computer security, application performance, stability and offer new features. Computer system vendors keep up the pace of change Major operating… Continue Reading
ESOPs are growing in popularity these days as a way of transitioning ownership of a private company to its employees. The owners can sell any portion of the business in a series of transactions over time. ESOPs can serve as an effective financing tool and save business owners and the company quite a bit in… Continue Reading
This is a very good question to ask when you value a business: what value is actually calculated? A business owner or investor is most interested in what their part of the company ownership is worth. On the other hand, if the company is offered for sale, the value of the entire enterprise needs to… Continue Reading
Business people and professional advisers love business sale transaction data. After all, what is a better indication of private business value than the data on sales of similar companies? Sounds like a no-brainer, right? It does, until you realize that the quality of business sale data leaves much to be desired. Consider the facts: unlike… Continue Reading
The rules applied by the Financial Accounting Standards Board (FASB) extend to some pretty important business assets: Software Patented technology Trade secrets Databases Patents have been valued for quite a while and their valuation presents no problems. Royalty income streams from licensing comparable intellectual property assets are the basis of valuing your patent portfolio. However,… Continue Reading
Take a look at the public capital markets, and one thing becomes immediately obvious: the higher the shares turnover for a given company, the higher its valuation tends to be. This is because investors love liquidity, i.e. the ability to trade business ownership interests quickly, with minimal costs, and at a predictable price. Smaller companies… Continue Reading
Do you expect a company to grow its earnings rapidly in the future? Then consider using the discounted cash flow method to capture the value of this upside. This valuation method lets you calculate business value using both the explicit earnings forecast as well as the measure of long-term earnings growth you expect. The sum… Continue Reading
It goes without saying that a company’s prospects are affected by the industry it competes in. To be credible, your business appraisal should include a discussion of the industry outlook. This may be more important than the overview of general economic conditions. The value of a company differs depending on whether it has a strong… Continue Reading
The discounted cash flow (DCF) method is ubiquitous in valuation of businesses and business assets. The net present value analysis is the extension of the standard DCF technique in valuing capital investment projects. Such projects cover business valuation in acquisition scenarios as well as purchases of equipment and machinery. Yet with all the popularity of… Continue Reading
If you are like most business people, figuring out the value of a public company seems straightforward. There is plenty of up to the minute information on the company’s stock price. Public companies have a large number of investors who pay close attention to business performance and actively trade its shares of stock. This gives… Continue Reading
Are you troubled with the results you get from your business valuation? It is not uncommon for people to have an expectation before the business value analysis is completed. When the results you get are way off base, you may wonder what went wrong. This may be the case whether you do your own valuation… Continue Reading