Risk assessment
The added value of benchmarking
All else being equal, the higher a business’s risk, the lower its value. Benchmarking a business against its competitors — or itself over time — is one way that valuators assess risk. This article looks at the components of a comprehensive benchmarking study and how various factors, including size, growth, liquidity and profitability, affect risk. The article points out that owners and managers can use a comprehensive benchmarking study as a strategic management tool and to help identify a business’s strengths, weaknesses and trends.

Re-evaluating discount rates in a distressed economy
Investors require a certain return for taking on the risk of investing in a business. Valuators measure risk using discount (and capitalization) rates and measure return using future income streams. Estimating discount rates is a complex task, even in the best of times. But the volatile economy has forced valuators to re-evaluate traditional methods of quantifying discount rates. This article discusses some of the issues facing valuators as they estimate discount rates in the current business climate.

Valuators cover the gamut from A to Z
A credible valuation that can withstand professional scrutiny requires diligent research and analysis of both the business interest itself and relevant valuation data, documented in an explanatory report. This article notes that valuation services can be helpful in numerous situations, including transaction planning, financial restructuring, litigation support and succession planning, pointing out that a valuator’s real skill is transforming assembled information into a meaningful valuation analysis.

Understanding liquidation value: Are you in the know?
Today’s faltering economy has meant that some businesses’ liquidation values exceed their going-concern values. This brief article notes the difference between going-concern value and liquidation value and explains the ins and outs of estimating liquidation value. It also mentions some of the factors valuators consider when going-concern value is no longer the best option.