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“These organizations agree on three major approaches to business valuation:  The asset approach: Also known as the cost approach, this valuation approach is based on finding the fair market value of assets (the easiest ones to value are tangible assets) and deducting the liabilities to determine the net asset value or the net worth of the business.  The market approach: This approach compares your company or a target company with similar companies. You can use comparisons to publicly traded companies or actual sales transactions for similar businesses. These valuations are frequently expressed in ratio form.  The income approach: This approach focuses on the future economic benefits you're anticipating from a business —better known as income. This amount is expressed in today's dollars, and is also known as present value.”
― Business Valuation For Dummies
― Business Valuation For Dummies
“As the celebrated investor Warren Buffett once said, "Price is what you pay. Value is what you get." We would add one more line: "If you do your homework." In business deals, most buyers and sellers have a singular focus on price — and price is hard to avoid. Negotiations ideally produce numbers that both sides can be happy with. But getting to the right price in any deal involves understanding what business assets are truly worth and then structuring a deal around financing and tax realities, which can be quite surprising to those who fail to plan.”
― Business Valuation For Dummies
― Business Valuation For Dummies
“In West's guide, rule-of-thumb guidance comes in two formats that most valuation experts recognize:  Percentage of annual sales: If a business had total sales of $ 100,000 last year and the multiple for that business was 40 percent of annual sales, the price based on that particular rule of thumb would be $ 40,000.  Multiple of earnings: An earnings multiplier makes the most sense to prospective buyers. It directly addresses the buyer's motive to make money: to achieve a return on investment. In many small companies, this multiple is commonly used against what is known as seller's discretionary earnings (SDE), which are earnings before accounting for the following items: • Income taxes • Nonrecurring income and expenses • Nonoperating income and expenses • Depreciating an amortization • Interest expense or income • Owner's total compensation for one owner/ operator after adjusting the total compensation of all owners to market value”
― Business Valuation For Dummies
― Business Valuation For Dummies
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| The Book Challenge: Poppy's Book Challenge | 28 | 232 | Apr 27, 2009 03:35PM |
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