Setting the record
straight
5 common
valuation myths
Business valuation lingo, logic and underlying mathematics can be
incomprehensible to those outside the profession, giving rise to
misconceptions. This article looks at five common valuation myths, including
the myth that net income and net free cash flow are synonymous and the myth
that unprofitable companies aren’t worth much — and attempts to clarify the
confusion.
Value added
Appraisers
can help divorcing parties in many ways
From
the beginning to the end of the divorce process, valuation professionals can
help handle financial issues in a fair, expedient manner. This article
discusses several ways in which valuators can assist divorcing spouses,
including valuing private business interests, dealing with the ins and outs of
goodwill, and aiding in difficult financial negotiations. The article points
out that early valuator involvement is key to an equitable result for all
parties.
Don’t put estate
planning on the back burner
As a result of the estate tax repeal
scheduled for 2010, many people mistakenly believe that estate planning is no
longer necessary. But the estate tax is scheduled to return in 2011, and many
estates already exceed the $1 million estate tax exemption scheduled to be in
effect for 2011 and after. So having an up-to-date estate plan in place is
important. This article explains that a valuator can be an important member of
an estate planning team, helping to crunch the numbers, strategize and support
estate tax filings.
Rules of thumb tell
just part of the story
Valuators customarily use the cost, income and market approaches when
valuing a business. But where do less scientific metrics — like industry rules
of thumb — fit into the valuation paradigm? This brief article explains the
limitations of rules of thumb, including that they’re unsupported,
oversimplified and possibly outdated. The article notes that rules of thumb can
be useful as a sanity check, but shouldn’t be the sole valuation method.
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