Frequently Asked Questions
What is the time frame for
completing a valuation?
Once we receive the necessary documents, it typically takes four
to six weeks to perform a thorough analysis, make a qualified
determination, and properly prepare a report communicating the
results of the valuation. During this time we will have ongoing
dialogue with the owner and other interested parties so there
are no surprises when the valuation is completed. If you have a
tight deadline, talk to us about it. Depending on your needs, we
may be able to shorten the turnaround time significantly.
What types of entities do you value?
We value virtually all types and sizes of closely held
companies, professional practices, partnerships, and other types
of businesses and business interests.
Click here for more information
about the types of businesses and business interests we value.
How much does a professional valuation cost?
The cost will depend largely upon the purpose of the valuation.
We offer different levels of service to meet almost anyone's
needs. For a price quote, talk to us. We will need to review the
specifics of your situation before quoting a price. Any
information exchanged will be treated with complete
confidentiality.
Can book value be a reasonable estimate of value?
Book value is almost never a good indicator of the value of a
business, and is usually much lower than the true value. Book
value generally reflects only the historical costs of the
company's tangible assets net of depreciation and liabilities,
ignoring appreciated asset values and company intangible asset
values such as a goodwill. Most importantly, it ignores the
earning power of the company which is what matters most for an
operating entity.
Are rule-of-thumb methods appropriate for determining value?
Rules-of-thumb almost always give misleading results.
Rules-of-thumb valuation methods (also called the industry method or a
formula method) call for multiplying the annual revenue of the
business by a multiple. The multiple is often derived from
hearsay and is unsupportable. Be aware that at the heart
of this method is the implicit assumption that, on average, a
given level of revenue will produce an associated amount of
future expected cash flow. And it is future expected cash flow
that essentially must be valued. Blind application of an average
multiple fails to explain the unique characteristics of the
business or business interest resulting in over- or under
valuation.
The American Society of
Appraisers Business Valuation Standards (BVS-V, V) comments on
the use of rule-of-thumb methods: "... value indications derived from
the use of rules of thumb should not be given substantial weight
unless they are supported by other valuation methods..."
