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.
In the US the Internal Revenue Service has laid out the expectations for what the tax authorities look for in business valuations. Here is the list: The nature of the business and its history The book value of the company stock and its financial condition The dividend paying ability of the firm The presence of… Continue Reading
Every business valuation relies upon a set of assumptions about how the economic environment will look some time in the future. Once the assumptions are made, the business appraiser can make forecasts for the business being valued. If you take a look at a typical business valuation report, there is usually a section outlining the… Continue Reading
You may have heard this: business value fluctuates as time goes on. Fair enough, but the question you may ask is what factors best capture this change? Here is our short list: Discount rate Capitalation rate Valuation multiples The reason these numbers are in a constant state of flux is that the marketplace conditions vary… Continue Reading
So why do you run across business appraisal result differences? You might think: if all business appraisers follow the standards such as USPAP and AICPA SSVS how come the results differ? The main reason is that clients influence the outcome of professional business valuations. Business people have a reason for business appraisals and an idea… Continue Reading
Need to get a valuation for an auto body shop? First, consider some industry sector stats. Auto body repair shops are a sizable part of the very large auto services industry. The companies address the essential need in collision repair, car exterior and interior maintenance and a host of value added services that go along… Continue Reading
The discounted cash flow or DCF valuation method is perhaps the most widely used technique in income based business appraisals. If you take a look at the calculation, you will notice that it consists of two parts: A discounted forecast of future earnings over a finite time period A so-called terminal value calculation The idea… Continue Reading
Car rental companies are ubiquitous at airports, inner cities, suburbs near auto dealerships. Temporary transportation has become so important that the industry has grown by leaps and bounds. In fact there are over 6,300 such companies in the US and their number is growing at about 28% every five years. The industry generates combined revenues… Continue Reading
You can see from our discussion of business valuation that there are a number of ways to determine what a company is worth. In theory the results you get by using the different methods should give you very similar answers. That often is indeed the case, yet the actual business values calculated with various methods… Continue Reading
If you are considering valuation of a retail shoe store, here are some interesting industry stats to bear in mind: In the US alone there are over 28,000 shoe store businesses classified under SIC code 5661 and NAICS 44821. Together they generate a combined revenue of $26.9B annually. The industry employs 3,233,000 staff. The average… Continue Reading
When you value a business the result is valid for the present time. As business conditions changes so does the value of a company. One way to use this idea is to track how business value changes over time. If you run a number of business valuations over a number of years, you can see… Continue Reading
Are you planning on a valuation for a physical therapy practice? Physical therapy services are a large part of the health care industry. Currently, there are some 34,300 physical therapy clinics in the US classified under SIC 8049 and NAICS 62134 industry classification codes. As a health care industry sector, these businesses generate over $24.5B… Continue Reading
Valuing an advertising agency? Here are some key industry statistics to consider: There are over 14,300 such businesses in the US alone, classified under SIC code 7311 and NAICS 54181. The companies generate a combined annual revenue of $30.6B and employ just under 160,000 people. The average advertising agency has $2,136,000 in annual sales with… Continue Reading
It is well known that all business valuations are done as of a certain date. It is possible to prepare a business appraisal at some point in the past. One benefit of this is that you have some ideas as to how things actually turned out. In fact, professional business appraisals are sometimes done as… Continue Reading
The concept of control premium in business valuation is this: to obtain control of a business the investor usually has to pay the per-share price that is higher than what a single share of the company stock sells for. Why would an investor seek a controlling share of a company? Because with control come a… Continue Reading
Valuation multiples are commonplace in business valuations. Their appeal is that it is easy to estimate your business value by comparison to sales of similar companies. Yet no two business enterprises are the same. How can you make sure that the valuation multiples you use give you the right answers about your company’s worth? Focus… Continue Reading