Close-Up On The Cost Approach
The cost (or asset-based) approach to valuing a business focuses on the balance sheet. This financial statement reports ‘book values’ for the company’s assets and liabilities. Here’s how the cost
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Tag: Valuation
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
Risky Business: 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
Taking 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
Tax Affecting & Valuing A Pass-Through Business
Most U.S. businesses operate as so-called “pass-through” entities, including partnerships, limited liability companies, and S corporations. For decades, the IRS and valuation professionals have been at odds over how to
Six Steps To Prepare Your Business For A Sale
The COVID-19 pandemic has put unprecedented stress on private business owners. Some are now considering selling their businesses. Before putting your business on the market, it’s important to prepare it
The Art & Science Of Goodwill Impairment Testing
Goodwill shows up on a company’s balance sheet when the company has been acquired in a business combination. It represents what is left over after the purchase price in a
Measuring Fair Value For Financial Reporting
Business assets are generally reported at the lower of cost or market value. Under this accounting principle, certain assets are reported at fair value, such as asset retirement obligations and
Prepare for Valuation Issues in Your Buy-Sell Agreement
Every business with more than one owner needs a buy-sell agreement to handle both expected and unexpected ownership changes. When creating or updating yours, be sure you are prepared for
Seven Ways to Prepare Your Business for Sale
For some business owners, succession planning is a complex and delicate matter involving family members and a long, gradual transition out of the company. Others simply sell the business and