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 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
If you own a private mailing business or need to appraise one for a client, here are some interesting statistics to consider: Mail box rental and shipping companies are classified under the SIC code 7389 and NAICS 561. This business services sector has just under 1,500,000 firms that generate over $301B in annual revenues. The… Continue Reading
One of the key factors that affects the value of a company is the industry in which it operates. So the question is why and by how much? The answer is risk. In fact, the industry-specific risk premium is one of the elements that make up the discount and capitalization rates for your business. And… Continue Reading
Do you own a lanscaping services company? Need to determine the value of your own business or prepare an appraisal for a client? Here are some interesting industry statistics to consider: Key landscaping industry statistics Classified under SIC code 0781 and NAICS 56173, there are over 93,680 landscaping planning, design and counseling establishments in the US alone. The industry as… Continue Reading
If you own a software firm, plan to start one or acquire an existing company, here are some interesting facts to consider: The two main segments of the software industry are custom software services and pre-packaged products. Software development services firms Classified under the SIC code 7371 and NAICS 541511, the firms in the software… Continue Reading
If you talk with professional business investors or business brokers, soon enough you will hear them mention business valuation ratios. Business appraisers refer to these tools as valuation multiples. Basically, the ratios are a technique to estimate the value of a business based on comparable business sales. Such market-based valuation tools are very useful in… Continue Reading
Privately owned and operated florists are a major part of the retail industry. Classified under the SIC code 5992 and NAICS 453110, there are around 35,650 such establishments in the US alone. The industry as a whole generates an impressive $6.6B in annual revenues and employs over 135,000 people. Yet an average flower shop is… Continue Reading
If you are like most business people, CPAs, brokers or investors, you probably take the actual business selling prices as a strong indication of what a similar business is worth. In fact, the market approach to business valuation relies on such selling prices comparisons for a good reason: Business selling prices offer an objective evidence… Continue Reading
Need to know how to value a service business? To get a top quality business appraisal, consider using several well-known business valuation methods. Professionally prepared appraisals use several valuation methods. Be aware that each method represents a different view of measuring business value. So it’s a good idea to review the results from several different… Continue Reading
One of the most difficult situations that often call for a business appraisal is divorce. Just about any jurisdiction considers business ownership interest a property that is part of the marital estate. As such, it must be distributed among the spouses. In the US, the family courts follow two standards on how the property in… Continue Reading