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 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
Are you preparing a business appraisal for yourself or a client? Then 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
A common reason business people need to have their business appraised is gift and estate tax situations. Business ownership grants by living owners to family members trigger a gift tax liability. If an owner passes away, the business is inherited by other partners or family members. One rather unsavory chore they need to handle quickly… Continue Reading
If you are valuing a privately owned business, the income-based valuation methods are probably high on your list of tools. To use these methods, such as the Discounted Cash Flow technique, you need to determine the discount and capitalization rates. Income based business valuation methods and company size If you take a look at the… Continue Reading
One of the key elements in business valuation of any size is risk assessment. Whether you use the direct capitalization methods, such as the Multiple of Discretionary Earnings technique, or the Discounted Cash Flow method, you need to calculate the capitalization and discount rates to capture that risk. Business valuation and risk measurement The Build-Up… Continue Reading
How to value a home remodeling contractor business? First, some important industry stats to consider: The home remodeling companies are usually classified within the specialty contractor industry sector under the SIC code 1799 and NAICS 236220. These businesses generate combined annual revenues of $41.96B. There are some 105,000 such firms in the US alone employing… Continue Reading
Quite a few privately owned businesses and professional practices have more than one co-owner partner. And unplanned departure of a partner can have a major effect on the success of a business going forward. To safeguard business continuity, you as business owners need to plan ahead about how to transfer business ownership interests with minimal… Continue Reading
If you are valuing an established company, business goodwill may well be a substantial part of the overall business value. One of the central methods to estimate the value of business goodwill is the Capitalized Excess Earnings technique, also known as the Treasury Method. Business people and financial advisers are sometimes confused by the results… Continue Reading