notesforEEE - business appraisers to estimate what your...

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Donald Cooper Week 13 Verona Edmond Valuation What is valuation? The determination of the value of an asset or liability. Business Valuation: A process and a set of procedures used to determine the economic value of an owner’s interest in a business. Example: You own IBM stock and you want to know how much it is worth. •Go to any financial website. •Locate the stock tables and multiply IBM's closing price by the number of shares you own. By doing this, you have valued your IBM shares or what you would receive in cash if you sold your shares at the closing price. In concept, valuing a private business is the same as valuing IBM stock. But, because a firm is private, there is no stock table that you can conveniently turn to. This is not a problem since there is “an art form” that provides the foundation for skilled
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Unformatted text preview: business appraisers to estimate what your business is worth. Why is valuation important? Basis for: Attracting Investors •For financing purposes (bankers will look for a valuation that focuses on liquidation) •Buy-sell agreements •Buying or selling shares to employees •Retiring and selling to other family members •Planning gifts to heirs •Anticipating estate tax problems •Providing adequate key man insurance coverage Based on assumptions about: • the state of the target market • the company’s product or service • the ability of management to deliver on the plan TYPES OF VALUATION Quantitative Valuation •Asset Valuation •Discounted Cash Flow Valuation •Comparison to similar companies Qualitative Valuation •Buchele Model...
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This note was uploaded on 01/22/2012 for the course EEE 370 taught by Professor Staff during the Fall '08 term at Syracuse.

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notesforEEE - business appraisers to estimate what your...

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