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3 Cards in this Set
- Front
- Back
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Business Valuation: What are the 3 basic types of valuation?
(According to American Business Appraisers) |
1. Fair Market Value
2. Fair Value 3. Investment Value FMV = willing buyer/willing seller; FV = FMV w/o minority discount; IV = value to a particular buyer |
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Name at least 10 of the 16 value drivers used to establish market valuation.
(According to CBB) |
1. History / trend of Revenues
2. History / trend of Cash Flows 3. Size of Cash Flows 4. Working Capital requirements 5. Marketability of the business 6. Degree of Competition 7. Ease of Entry into the business 8. Industry trends 9. Growth Opportunities for the business 10. Unique Assets (people/ processes/ licenses/ etc.) 11. Age & Quality of Physical Plant and Equipment 12. Location & Facilities 13. Amount of Risk (seasonality; customer/supplier concentrations) 14. Motivation & Flexibility of parties 15. Comparable Sales Data 16. ROI & Income Objectives of buyers |
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What is SDCF? How is it calculated?
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SDCF = Seller's Discretionary Cash Flow. It is a common cash-flow-based measure of business earnings for an owner-operator managed business.
Calculation: Business pre-tax earnings + Non-operating expenses - Non-operating income + Unusual or one-time expenses - Non-recurring income + Dep/amort expenses + Interest expense - Interest income + Single owner's total compensation & adjust compensation of other business owners to mkt value. |
