In today’s fast-pacеd businеss world,  having a clеar undеrstanding of a company’s truе valuе is critical to making informеd dеcisions,  planning for growth,  and achiеving ovеrall businеss succеss.  For businеssеs gеnеrating $20 million or morе in rеvеnuе,  obtaining a thorough businеss valuation is еssеntial.  This articlе еxaminеs why businеssеs in this rеvеnuе catеgory should prioritizе profеssional businеss valuation sеrvicеs and thе advantagеs thеy can gain.  Informеd Dеcision-Making: Businеss valuation is a vital tool in making wеll-informеd dеcisions ..read more

Although interest rate hikes have been meant to counter historical highs of inflation, they are not free of consequences to the economy or businesses. Such consequences have been significant headlines in recent weeks e.g., the 2nd largest collapse of a bank since 2001, SVB, along with the collapse of other regional banks. The U.S. Federal Reserve Bank (the “Fed”) interest rate hikes affect the required rate of return from investors (or discount rate) by increasing a key component of its calculation; this in turn affects the calculation of business values.  In this article, we will explain ..read more

Business valuations are as much art as they are science as it’s open to several interpretations and estimations on potential future outcomes of a company. Business valuation for privately held businesses in particular is more challenging due to the limited information that can be used to determine the fair market value of a business compared to the data available for public companies. That being said, there is still a framework that professional appraisers will operate from that contains generally accepted methods to value a privately-held business, and depending on the available information a ..read more

Business appraisers as part of valuation standards and accepted practices will often use applicable discounts in valuing privately held businesses. The identified value for equity interests as part of the overall estate are what the IRS use to determine the proper taxation. Meaning all else equal, if discounts are correctly applied to the said equity interests, this lowers their value, and hence lowers the taxable amount for estate planning / gifting of equity interests. As a result, discounts, can have a significant impact on the future tax liabilities for owners and their families. In this B ..read more

Business appraisals of privately held businesses often include hefty discounts under fair market value, which can go as high as 70% or more of the 100% equity value due to the lack of marketability and/or liquidity relative to other marketable and liquid assets such as stocks trading in the NYSE. Liquidity and marketability are often used interchangeably by many business valuation appraisers; however, there is a significant difference often missed, leading to improper determination of the discount applicable to a business value. This can lead to higher risk of improper taxation, over payment f ..read more

As businesses grow and expand, the value of their assets grows along with them. While physical assets such as equipment and property are easy to identify and value, it’s important not to overlook the value of intangible assets as well. In this blog post, we’ll discuss the intangible definition, the importance of valuing intangible assets, and the challenges associated with valuing them. What are Intangible Assets? Intangible assets are non-physical assets that are valuable to a company. These can include things like intellectual property, brand recognition, copyrights, customer lists, and even ..read more

Your business value is important. And that´s exactly why you need to act before it´s too late. One of your most valuable assets is your business, and understanding its value is crucial for making informed decisions about its future—meaning your future. Impacted by the success of your business are your time and emotional investment, fulfillment, and, at the end of the day, the future wealth of you and your family. In this article, we’ll specifically mention four valuation purposes whereby understanding what your business’ value is today and what drives this value, will allow you to take action ..read more

Introduction A reasonable cost of capital calculation hinges on accurately assigning a risk-free rate and equity risk premium to the model. While both are less prone to analyst-specific subjective criteria, there is still nuance to each. Both are moving targets, and analysts must weigh variables feeding the components closely to determine the most accurate estimate. Luckily, broadly accepted data sources feed each determination. Still, diligent assessments weigh conventional wisdom, project or company specifics, and a bit of predictive power that external factor forecasts with historical prece ..read more

Introduction Risk is an unavoidable part of life and is particularly embedded when determining the cost of capital. No investment or valuation is guaranteed, as any prudent advisor or planner will tell you, but quality analysts and investors try to quantify and forecast risk. The core output of the valuation process’ cost of capital is essentially a “cost of risk,” or the total premium expected for investing in an asset or a stake in a company. Proxies for risk drive the cost of risk output – namely, the firm’s particular beta and the market-wide, systematic risk. We will start with the latter ..read more

Introduction Calculating the cost of capital is a critical step to come up with an accurate valuation, but many analysts and investors find the process daunting. As much art as science, there are multiple ways to calculate the cost of capital and just as many discrete variables that comprise the calculations themselves. These variables, in turn, are rarely fixed or definitive; instead, they’re subject to interpretation and subjectivity, which compounds the overall difficulty in finding a cost of capital as it requires experience, finesse, and (often) an “informed guess” about the future. Befor ..read more