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Tag Archive for Growing Value and Liquidity Realization

Business Valuation, Growing Value And Liquidity Realization (Part IV Of Book Series)

The Business Valuation presents valuable information in the manner and style expected by sophisticated institutional investors and their advisors, and is often used as an exhibit to a Business Plan or Private Placement Memorandum for:

What To Expect In A Comprehensive Business Valuation Report

Business Valuation

Contents

Transmittal Letter A
Valuation Summary B
Summary Description of the Company
Asset-Based Approach C
Balance Sheets Analyzed and Adjusted
Net Asset Book Value
Net Realizable Equity
Excess Earnings
Income Approach D
Income Statements Analyzed and Recasted
Historic Cash Flows
Discounted Future Cash Flow
Capitalization of Cash Flow
Market Approach E
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Business Valuation, Growing Value And Liquidity Realization (Part III Of Book Series)

Michael Gilburd -Business Valuation, Growing Value And Liquidity Realization (Part III Of Book Series)

Why Business Valuations Are Growing In Popularity

Some business owners mistakenly think there is one Rule of Thumb to value their business. This is never true! For example, if you are a service business, someone may tell you the business is worth one years’ gross – but don’t for one moment think a business with three customers has the same value as one with 30, or even 300 customers. Is a radio station in a major market worth the same multiple of cash flow as one in a small town? Probably not. Are two dental practices in the same city, one with a famous, well-known leader worth the same multiple as a lesser known practice? Probably not.

Very few business owners know how much to expect from a business sale, how much to pay for an opportunity ahead, how to price a capital raise, or how to protect assets by knowing their value, even in these uncertain times.

Why do so many business buyers overpay? Because they don’t have an impartial professional telling them not to overpay! Why do so many business sellers have trouble selling their businesses? Because their advisors tell them to ask for too much! Why do some divorces ruin the business owning partner? And why high death taxes leave the heirs with so little of the estate? All for the same reason – unqualified individuals guessing at true values.
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Business Valuation, Growing Value And Liquidity Realization (Part II Of Book Series)

Michael Gilburd -Business Valuation, Growing Value and Liquidity Realization - Part 2

Discounts and Premiums
Based on research that will be discussed in the Appraisal Report, the determination of value shall be subject to certain discounts and premiums. Once a valuation amount is determined, a Business Appraiser considers premiums and discounts. Issues of majority and minority interest deal with the relationship between the interest being valued and the total enterprise. The primary factor bearing on the value of the minority interest in relation to the value of the total entity is how much control the minority interest has over that entity. The concept of marketability deals with the liquidity of the interest, that is, how quickly and certainly it can be converted to cash at the owner’s discretion. Also, combined premiums or discounts are multiplicative and not additive.

The Process
To obtain a professionally prepared business valuation, there is a process that usually includes the following:
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Business Valuation, Growing Value And Liquidity Realization (Part I Of Book Series)

Michael Gilburd - Book on Business Valuation, Growing Value And Liquidity Realization

TaxConnections has recently received permission to post a series of articles from the book Business Valuation, Growing Value And Liquidity Realization written by Michael Gilburd. Over the past several decades, Michael has prepared valuations and assisted in debt and equity placements from tens of thousands to millions and hundreds of millions of dollars while working for major financial companies.

Introduction – Business Valuation, Growing Value And Liquidity Realization

Business Owners and Business Buyers: What’s the Right Value?

Most business owners have very little confidence in their own abilities to set market values for their most important assets. According to the International Business Brokers Association, most business owners simply don’t know where to turn for reliable advice in a buy or sell situation. Some turn to lawyers or accountants, others turn to stockbrokers or even friends, but the truth is that without formal training and industry standard modeling techniques, none of these professionals is qualified to set valuations on businesses of any kind. The key to protecting your assets and interests at any bargaining table is to know that your position is supported by leading edge methodologies executed with seasoned valuation expertise.
What is your business worth?
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