top three business valuation faq's
DESCRIPTION
Question #1 Why can’t a “rule of thumb” be used to value a business? While there are certain multiples of net income or discretionary cash flow that can be used for business entities, in general a rule of thumb does not consider a specific business’s financial characteristics, inherent risks, and ownership attributes. Question #2 What methods are used to value a business? Depending on the purpose of the valuation and the type of report required, an asset approach, an income approach, and a market approach may be considered. Often times all three approaches are used and a weighting of each is subjectively applied by the appraiser. Question #3 Why are certain “discounts” applied to a business valuation? Depending on the ownership interest being valued, a discount for lack of control (if valuing a minority interest who cannot affect the business operations), a discount for lack of marketability (time needed to sell the interest), or both discounts may be applied to the value.TRANSCRIPT
VERITI CONSULTING LLC
Top Three Business Valuation FAQ’s
TRUTHBEHINDNUMBERS.COMIn-Depth Experience and Unparalleled Expertise
QUESTION #1
While there are certain multiples of net income or discretionary cash flow that can be used for business entities,
in general a rule of thumb does not consider a specific business’s financial characteristics, inherent risks, and
ownership attributes.
TRUTHBEHINDNUMBERS.COMIn-Depth Experience and Unparalleled Expertise
Why can’t a “rule of thumb” be used to value a business?
QUESTION #2
TRUTHBEHINDNUMBERS.COMIn-Depth Experience and Unparalleled Expertise
What methods are used to value a business?
Depending on the purpose of the valuation and the type of report required, an asset approach, an income approach,
and a market approach may be considered. Often times all three approaches are used and a weighting of each is
subjectively applied by the appraiser.
QUESTION #3
TRUTHBEHINDNUMBERS.COMIn-Depth Experience and Unparalleled Expertise
Why are certain “discounts” applied to a business valuation?
Depending on the ownership interest being valued, a discount for lack of control (if valuing a minority interest who cannot
affect the business operations), a discount for lack of marketability (time needed to sell the interest), or both
discounts may be applied to the value.
THANK YOUTHANKS FOR REVIEWING THIS
PRESENTATION
PRESENTATION BY: VERITI CONSULTING LLC8111 E. THOMAS RD. #120 SCOTTSDALE, ARIZONA 85251
TEL: (877) 520-1280 • EMAIL: [email protected] WWW.TRUTHBEHINDNUMBERS.COM
EXPERT TEAM
TRUTHBEHINDNUMBERS.COMIn-Depth Experience and Unparalleled Expertise
Liz Monty, CPA/ABV, CFF, CFE, CVA, DABFA
Managing Director
John White, MBA, CPA/ABV, CFF, CFE, CBA, CrFA, ASA
Managing Director
CONTACT VERITI CONSULTING LLC
CONNECT WITH EXPERIENCED FRAUD, FORENSIC & ECONOMIC DAMAGES EXPERTS
CALL: 877-520-1280EMAIL: [email protected]
PRESENTATION BY: VERITI CONSULTING LLC 8111 E. THOMAS RD. #120 SCOTTSDALE, ARIZONA 85251
TEL: (877) 520-1280 • EMAIL: [email protected] WWW.TRUTHBEHINDNUMBERS.COM