I frequently receive requests to quickly value a business by applying a “rule of thumb”, that is, application of a simple formula to the gross or net income of a business to determine its value. That's a bad idea - this post explains why....
Do the valuation provisions of your shareholder or partnership agreement specify a standard of value? If they do, is the standard of value “fair value”, “fair market value”, or something else? If the standard of value is not fair value or fair market...
We are frequently approached by people in the process of purchasing a business and request our advice with transaction structure and tax planning. Although the buyer has not conducted any due diligence or consulted a professional regarding the value of the business, negotiations have...
In a business sale, transaction structure can have a huge impact on the amount of taxes paid. With the proper structure, income taxes may be reduced by as much as 50%. This post discusses issues to consider when structuring a business sale....
This post reviews the four steps a business owner looking to sell can take to increase cash flow and reduce the buyer's perception of risk. It also highlights the four most common risk factors to cash flow....
I have helped many clients purchase businesses, and probably advised just as many to walk away from deals. What makes a deal good and what are the important factors in evaluating the purchase of a business? If you are considering purchasing a business,...
Reducing costs can help you increase cash flow and, as a result, the value of your business.[/caption]
The value of a business is based on two factors: the expected future cash flow of the business and the risk that future cash flow will occur when and in the amounts expected.
Cash flow and risk are the meat and potatoes of business valuation. The valuation report that is produced is just a detailed analysis of these factors.
EBITDA is an acronym for Earnings Before (deduction of) Interest, Taxes, Depreciation and Amortization.What is goodwill? How is it measured? Why is it important? Goodwill is often misunderstood by owners of closely-held businesses. Here are some insights into goodwill and how you can create or increase the value of goodwill in your business....
