Valuing Synergies
In mergers and acquisitions (M&As), there are some buyers who are willing to pay a premium above the fair market value of the business on a controlling basis. This premium […]
Category: Valuation
3 Approaches to Valuing a Businesss
Valuing a private business is a complex endeavor. But, when all is said and done, valuation analyses boil down to three general approaches. 1. Market Approach Under this approach, valuators […]
Taking a Red Pen to Make Financial Adjustments for Valuation Purposes
Financial statements are an important source of data for valuing a business. But they tell only part of the story. An accurate business valuation hinges on a comprehensive understanding of […]
Do Valuation Discounts Apply to Compulsory Shareholder Buyouts?
Valuation discounts for lack of control and marketability are major points of contention when companies or controlling shareholders are required to buy out shareholders who own minority interests. What’s appropriate […]
Manufacturers: Is Your Buy-Sell Agreement Up to Date?
A buy-sell agreement is a critical tool for owners of closely held manufacturing companies. It ensures an orderly ownership and management transition when an owner dies, becomes disabled or otherwise […]
Rx for Valuing a Distressed Business
Over the last two years, market conditions — from cost increases and forced shutdowns to shortages of labor and supplies — have taken their toll on many businesses. While owners […]
Don’t Discount the Key Person Discount
In the fourth quarter of 2021, CEO resignations were up 16% over the prior year, according to executive outplacement firm Challenger, Gray & Christmas. Recent and announced high profile departures […]
When Subsequent Events Count
The value of a business interest is valid as of a specific date. The effective date is a critical cutoff point because events that occur after that date generally are […]
What Factors into the Cost of Capital?
Valuation experts often use discounted cash flow (DCF) techniques to determine the value of a business or estimate economic losses. A critical input in a DCF model is the cost […]
Marketability Discounts on Controlling Interests
In a business valuation context, the term “marketability” refers to the ability to quickly convert property to cash at minimal cost. While publicly traded stocks are readily marketable, interests in […]
To Tax Affect or Not to Tax Affect? A Key Question when Valuing a Pass-Through Business
Most U.S. businesses operate as so-called “pass-through” entities, including partnerships, limited liability companies (LLCs) and S corporations. For decades, the IRS and valuation professionals have been at odds over how […]
Six Steps to Prepare Your Business for a Sale
The COVID-19 pandemic has put unprecedented stress on private business owners, and some are now considering selling their businesses. Before putting your business on the market, it’s important to prepare […]
