TITLE

Planning a Small-Business Valuation and Sale

AUTHOR(S)
Devaney, Michael
PUB. DATE
July 2003
SOURCE
Journal of Financial Planning;Jul2003, Vol. 16 Issue 7, p56
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article discusses the factors to consider in planning a small business valuation and sale. The time required to sell the business may also vary based on the size, geographic location and nature of the business. Some businesses may be marketed nationally, while others, such as beauty parlors or taverns, are typically sold to local buyers. Small-business sales are often characterized by asymmetric information, meaning the seller possesses more information on the business than he or she is willing to share with potential buyers, particularly information that may negatively influence the final price. In theory, the value of any asset is equal to the risk-adjusted present value of the future cash flow generated by the asset. Some valuation techniques place more emphasis on the future while others emphasize historical performance. Generally, the earning power of the business is accorded the most importance in business valuation--hence, the emphasis on the discounted value of future income. Business valuation is the analysis and processing of market information. Ideally, there is an abundance of data, and each valuation approach results in the same estimate of fair market value. Many financial planning clients will use retirement funds to purchase a small business or fund their retirement from investing the proceeds from the sale of their small business. INSET: Choosing a Business Appraiser.
ACCESSION #
10209137

 

Related Articles

  • A certified business valuation can smooth tile transition. Ganim, Lawrence J. // Fairfield County Business Journal;5/29/2006, Vol. 45 Issue 22, p14 

    The article focuses on the need for professional valuations of a business enterprise in the U.S. The valuation process of business enterprise allows owners to identify the fair value of the ownership interest. This process is advantage for owners who wants to transfer the ownership to an...

  • What's Your Business Worth Today? Ravosa, Michael // BusinessWest;5/29/2006, Vol. 23 Issue 3, p32 

    The article discusses the importance of constantly valuating overall worth of business assets, particularly to small business enterprises in the U.S. It recommends the help that professional valuation firms can offer as business valuation deals with numerous complicated factors. According to the...

  • AUDITING FAIR VALUES IN A SENSITIVE SOCIO-ECONOMICAL CONTEXT. Farcane, Nicoleta; Deliu, Delia; Gheorghian, Maria // Annales Universitatis Apulensis - Series Oeconomica;2011, Vol. 13 Issue 2, p364 

    The concept of fair value was subject of many debates and disputes in recent years. These debates have focused mainly on the relevance of the concept, but also on the practical difficulties in determining reasonable estimates, raising particularly the interest of practitioners in terms of...

  • Takeaways From Six Recent Business Valuation Cases.  // Business Valuation Update;Jan2015, Vol. 21 Issue 1, p1 

    The article discusses several business valuation court cases. The cases involved the use of the merger price, rather than the value resulting from the discounted cash flow, as the most reliable indicator of the fair value of the company subject to merger and the application and the application...

  • Chancery Relies on 'Simple and Powerful' DCF for Fair Value.  // Business Valuation Update;Nov2016, Vol. 22 Issue 11, p25 

    The article focuses on the case regarding the request for statutory appraisal of a software company. It offers details of the background of the case that involves a privately held company which was provided with a subscription-based online contractor database and experienced substantial growth...

  • Seven Takeaways From Recent Business Valuation Cases.  // Business Valuation Update;Apr2014, Vol. 20 Issue 4, p1 

    The article focuses on several business valuation court cases and their implications on the industry. Topics mentioned include effectiveness of the excess earnings method in valuing small businesses and professional practices, details of a divorce case wherein there were different values...

  • Avaliação de Micro e Pequenas Empresas Utilizando a Metodologia Multicritério e o Método do Fluxo de Caixa Descontado. Andrade de Lima, Marcus Vinicius; Montenegro de Lima, Carlos Rogério; Dutra, Ademar; Miranda Lopes, Ana Lúcia // Revista de Ciências da Administração;Jan2010, Vol. 12 Issue 26, p48 

    This paper presents a contribution to the method of discounted cash flow methodology using multicriteria decision aid. This methodology incorporates qualitative variables and subjective to the traditional method of discounted cash flows used in valuation companies. To illustrate the proposed...

  • Help small business customers develop an exit strategy. Flanagan, Chad // North Western Financial Review;7/1/2009, Vol. 194 Issue 13, p5 

    The author provides tips on how to help small business customers develop an exit strategy to enhance business value. The author said that business owners need to improve value or reduce the risk associated with the business to improve earnings for sustainable level of earnings, growth rate and...

  • An Approach for Convergence Regarding the Fair Value Concept versus Fair Market Value. Ionica, Oncioiu; Daniela-Simona, Nenciu // Ovidius University Annals, Series Economic Sciences;2012, Vol. 12 Issue 2, p1277 

    The goal of a methodical business valuation process is to arrive at a clear and supportable estimate of "fair market value". On the other hand, determining the "fair market value" of a business is important not only when the owner is putting up a "for sale" sign; it also can affect long-range...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics