Valuation Basic Articles of Interest

The following are recommended articles that we have published in recent newsletters. Each discusses important issues in valuation.

The Art (and Science) of Valuation - A widely accepted cliché in the appraisal community is that valuation is as much art as it is science. Although teaching the art of valuation in a brief article is impossible, here are the basics behind its science.

5 questions to answer before picking up the phone - Stop. Before you contact a valuation professional, take the time to answer these questions to streamline the valuation process and avoid unnecessary confusion down the road…

It’s a family affair - Valuing family businesses - Attorneys familiar with family-owned enterprises know that these businesses are somewhat quirky and often require client-handling finesse. The same holds true for valuation professionals who appraise family businesses, especially those that are smaller. Let’s take a closer look at the nuances involved.

Private vs. public companies - The New York Stock Exchange and other public markets provide readily available, objective pricing information. Therefore, valuators routinely rely on public stock market data when valuing private businesses.

Setting the record straight - 5 common valuation myths - Business valuation is a complex financial discipline. Much of its lingo, logic and underlying mathematics can be incomprehensible to those outside the profession, giving rise to confusion and misconceptions.

Analyze this: An overview of financial statement analysis - Financial statement analysis is an important part of every valuation assignment. By benchmarking a company against its competitors and itself over time, the valuator gauges risk and estimates expected return.

Recycle bottles, not valuations - Valuations are valid only for a specific time and purpose. Typically, a valuator explains the valuation’s scope in an engagement letter and again in the written report. Despite this, business owners sometimes mistakenly think they can save time and money by recycling old valuations for new purposes.

Defining the Standard of Value: Standards at a glance - Choosing the appropriate standard of value is an important — and sometimes difficult — decision that requires input from valuators, owners or investors, attorneys and court directives. This chart defines several common standards of value and identifies possible situations in which these standards may apply.