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.
Curiosity aside, business appraisals are almost always triggered by a pressing need. Business people generally are interested in what the business is worth for these reasons: Business sale transaction, including sale of the entire company or offering a block of stock for sale. The need to raise additional debt or equity capital. Gift or estate… Continue Reading
In most jurisdictions, private businesses must pay the so-called ad valorem taxes on business personal and real property. Most business people treat these taxes as a necessary evil. In other words, you have to pay them regardless of how well or poorly the company did in a year. You simply have to fill out the… Continue Reading
Valuation of specialized assets is among the hardest tasks a business appraiser may undertake. Just about all businesses have such assets on hand. Imagine a technology company with specialized lab space and equipment. Or a manufacturing firm with its own set of machinery and factory floor layout. In each case the managers have adapted the… Continue Reading
Do you need valuation for an auto dealership? Here are some industry statistics to consider. New and used car dealerships are a significant part of the automotive retail and services industry. Classified under the SIC code 5511 and NAICS 441110, there are some 43,600 such establishments in the US alone. The industry sector generates a… Continue Reading
If you are valuing a private company, one of the key elements of the appraisal is assessment of the business risk. You can quantify your risk assessment as the discount or capitalization rates. To calculate these rates use any number of the cost of capital models such as the build-up or CAPM. Regardless of the… Continue Reading
If you are thinking of valuing an environmental consulting company, here are some key industry statistics to ponder. The industry sector, classified under the SIC code 8748-9905 and NAICS code 541620, consists of over 10,220 firms; mostly in private ownership. The industry sector as a whole generates about $13.4B in annual revenues. The average environmental… Continue Reading
If you are considering valuation of a company, private or public, the choice of valuation methods may seem bewildering at first. Business appraisers and economists recognize that there are three ways to value any company: Asset approach – which looks at the company’s assets and liabilities. Income approach – that establishes the company’s value based… Continue Reading
If you are preparing a business appraisal for yourself or a client, following established business valuation standards could lend considerable credibility to your work product. Over the years the business appraisal profession has come up with a number of standards seeking to define everything from the methodologies to the scope and format of business valuation… Continue Reading
Residential and commercial real estate appraisal firms comprise a large segment of the real estate services industry. Classified under the SIC code 6531 – 9901 and NAICS 531320, there are some 14,000 such companies operating in the industry in the US alone. Together these professional services firms generate just over $5.8B in annual revenues employing… Continue Reading
If you need to determine the value of goodwill of a business or professional practice, the capitalized excess earnings method is an excellent tool. This asset-based valuation method, known as the Treasury method, is especially well suited for goodwill estimation for all types of privately owned companies. Treasury method uses two rates of return One… Continue Reading
If you are valuing a private business for any reason, the market approach should be an essential part of your analysis. There are a couple of methods you can use to establish the value of a privately owned firm: Comparative transaction method Guideline public company method To use the comparative transaction method you basically develop… Continue Reading
Have you considered using the Discounted Cash Flow method in your business valuation? If so, you need to focus on creating reliable business earnings forecasts and assessing its risk. Earnings growth rate effect on terminal value An often overlooked part of the discounted cash flow method analysis is estimation of the long-term business earnings growth… Continue Reading
One of the central valuation methods under the income approach is the Discounted Cash Flow technique. To apply this method in your business valuation you would need to work up the following key inputs: Forecast of business cash flows Discount rate measuring the business risk Business long-term value, known as the terminal value While the… Continue Reading
Companies developing security software applications fall within the custom software industry sector. It is classified under SIC code 7371 and NAICS 541512. Information systems security concerns in companies large and small are a major reason this sector of the software industry has experienced rapid growth in recent years. In 2011, over 49,000 US based firms… Continue Reading
If you need to get a top notch business appraisal, consider using a number of different business valuation methods. This multi-method approach to business valuation is standard in professionally prepared appraisals. The reason is that each method sheds a different light on business value. Hence, seeing the results from a number of methods gives you… Continue Reading