Let me begin with a huge caveat – the facts and circumstances of every business are different. And, there is no way to definitively determine the value of a business (unless of course it is sold) without an evaluator assessing the fact-basis and completing the appropriate valuation analyses for the entity. For instance, I once…
In addition to Standard of Value and Premise of Value which we discussed last month, another important concept is the Valuation Approach. Valuation Approaches The valuation approach is the actual method of valuing the business. The most commonly used methods fall into one of three general categories. It should be noted that in valuation engagements, the valuator…
Business valuations come in different types and flavors. Most people logically think that there is one – and only one, value for a business. But that is not the case. There are several concepts which greatly influence a business’ valuation. In this newsletter we will tackle: Standard of Value There are many situations in which…
Most business owners do not have a realistic idea of what their businesses are worth. Owners almost always think that their business is worth quite a bit more than the market would likely bear. There are several reasons for this.
Increasing the value of a company requires years of planning and execution. Most valuators look at the last five years of operating results to substantiate their conclusions. So, let’s look at maximizing the value of your business today for a potential sale or transfer tomorrow.
We are in the middle of a once-in-a century pandemic, but life (mostly) goes on. And the need for business valuations has not gone away. People are still selling their businesses, getting divorced, buying out partners and planning for their futures. People are wondering if they should get a valuation now or wait until there is some semblance of normalcy.
Business valuations come in different types and flavors. Most people logically think that there is one, and only one, value for a business. But that is not the case. There are three concepts which greatly influence a business’ valuation. They are: Standard of Value, Premise of Value, and Valuation Approaches.
Let me begin with a huge caveat – the facts and circumstances of every business are different. And, there is no way to definitively determine the value of a business (unless of course it is sold) without an evaluator assessing the fact-basis and completing the appropriate valuation analyses for the entity.
The Value Gap, have you ever heard of it? Well, if you are thinking of selling your business in the next few years, it is a term that you should get familiar with. The value gap is the difference in price between what the seller thinks his/her business should sell for and what a buyer is willing to pay for it. Bluntly, it is unrealistic expectations on the part of the seller.
In its simplest form, the value of a business can be boiled down to just two components: risk and reward. Although a significant amount of thought and rigor is required to determine the value of a specific business, the underlying concept remains the same.
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