Your Best Approach to Determining Value
If you're buying, selling, or valuing a business, how can you
determine its true value? By basing it on present market conditions
and sales of similar businesses. The market approach is the premier
way to determine the value of a business or partnership. With
convincing evidence of value for both buyers and sellers, it can
end stalemates and get deals closed. Acclaimed for its empirical
basis and objectivity, this approach is the model most favored by
the IRS and the United States Tax Court-as long as it's properly
implemented.
Shannon Pratt's The Market Approach to Valuing
Businesses, Second Edition provides a wealth of proven
guidelines and resources for effective market approach
implementation. You'll find information on valuing and its
applications, case studies on small and midsize businesses, and a
detailed analysis of the latest market approach developments, as
well as:
* A critique of US acquisitions over the last twenty-five
years
* An analysis of the effect of size on value
* Common errors in applying the market approach
* Court reactions to the market approach and information to help
you avoid being blindsided by a litigation opponent
Must reading for anyone who owns or holds a partial interest in
a small or large business or a professional practice, as well as
for CPAs consulting on valuations, appraisers, corporate
development officers, intermediaries, and venture capitalists,
The Market Approach to Valuing Businesses will show
you how to successfully reach a fair agreement-one that will
satisfy both buyers and sellers and stand up to scrutiny by courts
and the IRS.
Autorentext
Shannon P. Pratt, CFA, FASA, MCBA, CM&AA, is the Chairman and CEO of Shannon Pratt Valuations, Inc. a premier business valuation firm located in Portland Oregon, and is the founder and Editor Emeritus of Business Valuation Resources, LLC. Over a distinguished career of close to four decades, he has performed valuation engagements for M&A, ESOPs, gift and estate taxation, marital dissolution, shareholder oppression and dissent, and numerous other purposes. He has conducted numerous fairness and solvency opinions, has testified in a wide variety of federal and state courts across the country, and frequently participates in arbitration and mediation proceedings. Dr. Pratt is one of the most successful and respected authors in his field. He is the author or coauthor of several industry standards, including Valuing a Business: The Analysis and Appraisal of Closely Held Companies, Valuing Small Businesses and Professional Practices, The Market Approach to Valuing Businesses, Standards of Value, Business Valuation and Taxes, The Lawyer's Business Valuation Handbook, and Cost of Capital.
Klappentext
Your Best Approach to Determining Value
If you're buying, selling, or valuing a business, how can you determine its true value? By basing it on present market conditions and sales of similar businesses. The market approach is the premier way to determine the value of a business or partnership. With convincing evidence of value for both buyers and sellers, it can end stalemates and get deals closed. Acclaimed for its empirical basis and objectivity, this approach is the model most favored by the IRS and the United States Tax Court—as long as it's properly implemented.
Shannon Pratt's The Market Approach to Valuing Businesses, Second Edition provides a wealth of proven guidelines and resources for effective market approach implementation. You'll find information on valuing and its applications, case studies on small and midsize businesses, and a detailed analysis of the latest market approach developments, as well as:
- A critique of US acquisitions over the last twenty-five years
- An analysis of the effect of size on value
- Common errors in applying the market approach
- Court reactions to the market approach and information to help you avoid being blindsided by a litigation opponent
Must reading for anyone who owns or holds a partial interest in a small or large business or a professional practice, as well as for CPAs consulting on valuations, appraisers, corporate development officers, intermediaries, and venture capitalists, The Market Approach to Valuing Businesses will show you how to successfully reach a fair agreement—one that will satisfy both buyers and sellers and stand up to scrutiny by courts and the IRS.
Zusammenfassung
Your Best Approach to Determining Value
If you're buying, selling, or valuing a business, how can you determine its true value? By basing it on present market conditions and sales of similar businesses. The market approach is the premier way to determine the value of a business or partnership. With convincing evidence of value for both buyers and sellers, it can end stalemates and get deals closed. Acclaimed for its empirical basis and objectivity, this approach is the model most favored by the IRS and the United States Tax Court-as long as it's properly implemented.
Shannon Pratt's The Market Approach to Valuing Businesses, Second Edition provides a wealth of proven guidelines and resources for effective market approach implementation. You'll find information on valuing and its applications, case studies on small and midsize businesses, and a detailed analysis of the latest market approach developments, as well as:
- A critique of US acquisitions over the last twenty-five years
- An analysis of the effect of size on value
- Common errors in applying the market approach
- Court reactions to the market approach and information to help you avoid being blindsided by a litigation opponent
Must reading for anyone who owns or holds a partial interest in a small or large business or a professional practice, as well as for CPAs consulting on valuations, appraisers, corporate development officers, intermediaries, and venture capitalists, The Market Approach to Valuing Businesses will show you how to successfully reach a fair agreement-one that will satisfy both buyers and sellers and stand up to scrutiny by courts and the IRS.
Inhalt
List of Exhibits xv
Foreword xix
Preface xxi
Acknowledgments xxv
Notation System Used in This Book xxvii
Introduction xxxi
Part I. Defining Market Multiples and Market Approach Methods 1
1. Defining Market Value Multiples 3
Common Equity Only versus Total Invested Capital Multiples 5
Computing Market Value of Equity Multiples 9
Commonly Used Market Value of Equity Multiples 10
Computing Market Value of Invested Capital (MVIC) Multiples 15
Commonly Used MVIC Multiples 17
Time Periods to Measure Financial Variables 22
Relationship between Market Multiples and Capitalization Rates 23
Summary 23
2. The Guideline Public Company Method 25
Scope of Market 26
Availability of Public Company Data 26
Analytical Data for Public Companies 29
The Guideline Public Company Basic Procedure 31
Premiums and Discounts 33
Summary 34
3. The Guideline Transaction (Merged and Acquired Company) 35
Method
Differences in Transaction Structure 36
Scope of Market 38
Availability of Merged and Acquired Company Transaction Data 38
How Far Back in Time Are Transactions Relevant? 40
The Guideline Merger and Acquisition Basic Procedure 41
Premiums and Discounts 41
Summary 42
ix
4. Other Market Methods 44
Past Transactions 44
Offers to Buy 46
Rules of…