Business Challenges Caused by COVID-19 The overall impact caused by COVID-19 is extraordinary. Many companies have weathered shutdowns and falling customer demand. Now, many are facing challenges with increases in direct costs (such as labor and materials), indirect costs, and added debt service. The companies that had strong balance sheets before the pandemic seem to [...]
When determining the fair market value of a business, an appraiser may consider using the private company transaction method. Pricing multiples can be derived from this method, which is based on actual consummated transactions in privately-held stock. Do these transactions represent fair market value? Fair market value (“FMV”) is defined in The International Glossary of [...]
A business is usually the most valuable asset; yet owners typically have no idea what their business is worth. Unlike real estate or brokerage investments, owners are handicapped by not having readily available information to indicate business worth. For example, with real estate, nearby transactions occur daily. You can usually find that 4 bedroom, 2 [...]
An appraiser seeking to determine a company’s fair market value may choose to use a market approach called the private company transaction method. This method is based on actual transactions in privately-held stock. It is from these transactions any number of pricing multiples can be derived. Buyers, sellers and investors may ask, however, if the [...]
Revenue Ruling 59-60 supports the market approach to value. One of the market-based methodologies, the private company transaction method, looks at transactions in privately-held stock to derive a pricing mechanisms to value a particular company. The key to this method, and to the market approach in general, is comparability. The business appraiser will attempt to [...]
Business Risk When performing a business appraisal, a great deal of research and analysis is done to help the appraisers arrive at an indication of value for the entity. Certain research and analyses relate to the appraiser’s assessment of risk. One type of risk analysis often used is the S.W.O.T. analysis (“SWOT”). SWOT [...]
When preparing a business appraisal for a business, financial statements, tax returns, leases and operating agreements are often reviewed and utilized. Such information is useful in deriving an opinion of value, but often only provides a narrow and incomplete picture of the business. As most business owners will tell you, there is more to their [...]