Business Valuation Methods: Income Approach and DCF Model – Company Valuation Expert in St. Louis, Chicago

Business Valuation Methods: Income Approach and DCF Model – Company Valuation Expert in St. Louis, Chicago

One of the approaches business valuation companies will consider when providing a valuation of a company is the Income approach.

The income approach considers historical income, future revenues of a company, the earning potential and also capital requirements, or how much will be needed to invest in the building and equipment to support future revenue growth.

There are a couple of ways to look at the potential income of a company. One business valuation method which falls under the Income approach is the discounted net cash flow or DCF method. This method involves projecting the revenues, cost of goods sold, operating expenses, depreciation, working capital and taxes for five to ten years into the future.

The next step is to discount this future revenue stream to the present, which most of you will recognize as a present value calculation. The discount rate is derived from several methods such as the build up model or CAPM for example. The business valuation expert will also have to take into consideration whether this is a control or minority interest and make an adjustment with a control premium or a discount for lack of control. These are business valuation terms…which we discuss in more detail in other videos.

There can also be situations where there are liquidity or marketability issues for stock in closely held businesses. There are discounts for lack of marketability to cover these issues.  As you can see there are many steps to consider when valuing a company from the income approach, but at least now you know enough to be dangerous.

If you would like more information on business valuations, methods to value a company or how to find reputable business valuation companies in Chicago, New York or St. Louis check out our website at http://www.ValuationStLouis.com or you can find additional videos on company valuation issues at http://www.YouTube.com/businessvaluationSTL

Business Valuation Methods: Income Approach and DCF Model – Company Valuation Experts in St. Louis, Chicago

Business Valuation Methods — Income Approach and Discounted Cash Flow or DCF Model. We are company valuation experts in St. Louis, MO. One of the approaches business valuation companies will consider when providing a valuation of a company is the Income approach.

The income approach considers historical income, future revenues of a company, the earning potential and also capital requirements, or how much will be needed to invest in the building and equipment to support future revenue growth.

There are a couple of ways to look at the potential income of a company. One business valuation method which falls under the Income approach is the discounted net cash flow or DCF method. This method involves projecting the revenues, cost of goods sold, operating expenses, depreciation, working capital and taxes for five to ten years into the future.

The next step is to discount this future revenue stream to the present, which most of you will recognize as a present value calculation. The discount rate is derived from several methods such as the build up model or CAPM for example. The business valuation expert will also have to take into consideration whether this is a control or minority interest and make an adjustment with a control premium or a discount for lack of control. These are business valuation terms…which we discuss in more detail in other videos.

There can also be situations where there are liquidity or marketability issues for stock in closely held businesses. There are discounts for lack of marketability to cover these issues. As you can see there are many steps to consider when valuing a company from the income approach, but at least now you know enough to be dangerous.

If you would like more information on business valuations, methods to value a company or how to find reputable business valuation companies in Chicago, New York or St. Louis check out our website at http://www.ValuationStLouis.com or you can find additional videos on company valuation issues at http://www.YouTube.com/businessvaluationSTL

 

Alimony Guidelines and Spousal Support Calculators for Divorce Proceedings in Missouri

http://www.ValuationStLouis.com (314) 541-8163 Alimony Guidelines and Spousal Support Calculators for Divorce Proceedings in Missouri – Divorce valuation expert in St. Louis.

Many attorneys and business owners want to know about alimony guidelines or spousal support issues regarding a divorce in Missouri:

What happens after you file divorce papers? Is there a way to determine alimony with a spousal support calculator online?

Well — first off, most of us regular people use the term alimony to refer to the payment from one spouse to another after a divorce. Many family law attorneys use the word maintenance or spousal support when referring to alimony.

That being said — you can certainly use an online tool to calculate the alimony or maintenance amount, but you would just be guessing at the number. There are some software packages out there for $100-300, but then you need to know how to use the software and analyze the data.

Many attorneys will hire an expert to calculate the tax issues involved in paying maintenance and in some instances child support.

There are many factors involved in determining what amount of alimony will be paid. Some of the factors a judge will consider is the length of the marriage, how much each person worked over the marriage, what is the history of earnings for each person, what is the age, education and future earning potential of each parties, were there any children involved or future child care costs, are there significant assets which will provide cash flow to the parties…and so on.

Your lawyer will know if there are any spousal support guidelines — but usually this is based on the attorney’s experience in the family law courts.

One thing to keep in mind is that alimony is a tax deduction to the paying spouse and taxable income to the receiving spouse. So it is important to have someone who is knowledgeable about the tax ramifications of spousal support calculate the amount.

Alimony guidelines differ depending on all the variables for each divorce situation. Many times it will cost between $500 and 1500 for an expert to calculate various scenarios for the divorcing parties. This will give your lawyer plenty of information to negotiate on your behalf.

Alimony is usually just one part of the negotiation of a divorce or legal separation and it is best if the calculation is left to a professional rather than an online spousal support calculator.

If you would like to know more about how to find a Missouri divorce valuation expert, certified valuation analyst or forensic accountant, in St. Louis, Chicago or Kansas City check out our website at http://www,valuationstlouis.com or for more videos on how to value a company check out http://www.Youtube.com/businessvaluationstl

Business Brokers St. Louis: Finding Companies that Buy Businesses – Chicago & New York

http://www.ValuationStLouis.com How to Find Companies that Buy Businesses: M&A Business Brokers St. Louis and Buy-Side Specialists – Experts have contact lists of companies actively buying and selling in certain industries.

Business owners always have questions about how to buy and sell businesses: one of the main questions is “how do I find companies that buy businesses?”

Well, it is not as easy as it seems, but there are some steps such as industry research, contacting a business broker and reviewing your list of contacts, that can get you in the right direction, especially if you are considering selling your company in the next 3 to 5 years or even sooner. For this video we will cover the topic of contacting a business broker.

If you are open to discussing your ideas of selling your business with other advisors, such as accountants or lawyers then you might be able to get a referral to a successful business broker in your area.

Typically business brokers or merger and acquisition experts have various contacts with companies who are actively buying and selling in certain industries.

You will want to find an M&A expert who specializes in your particular field or has competed transactions in this field. Why you ask? Well they will probably have contacts they can call immediately to start to feel out the buyer and the market.

You don’t want to try to cold call prospective buyers, you want to hire someone who knows how to sell companies and will work to get you top dollar. These business brokers will also work for some companies from a sell side prospective. This means they work for buyers looking for companies such as yours.

The one thing you need to consider is that a broker who is working with a buyer may not be the best advocate for your company. In this instance you may need to contact another M&A expert in order to negotiate deals with the buyer.

Also, don’t give a number of what you want to get out of the company — to any broker. Give them your historical financials and projections, let the expert feel out the market and then come to you to see how much they can get. They need to work for you to get you top dollar.

If you own a business in St. Louis and would like to learn more about business valuations for determining the price to sell your company, how to value a company, or how to find a qualified business broker in New York, Chicago or St. Louis, visit our website at http://www.valuationstLouis.com

Business Valuation Methods: Asset or Cost Approach

One of the approaches business valuation companies will consider when providing a valuation of a company is the asset approach. The asset approach considers the assets and liabilities of a company, there is more focus on the balance sheet of the company.

This approach is typically used when valuing holding companies, companies with significant real estate holdings or possibly companies without much cash flow from operations.

The adjusted book value is one way to look at the balance sheet. Usually this approach involves restating some of the items to fair market value. This could include buildings and land, equipment or intercompany loans.

For buildings, there may be real estate appraisals performed to get to the fair market value.

There can also be situations where there are liquidity or marketability issues for stock in closely held businesses. There are discounts for lack of marketability to cover these issues.

As you can see there are many steps to consider when valuing a company from the asset approach, but at least now you know enough to be dangerous.

If you would like more information on business valuations, methods to value a company
or how to find reputable business valuation companies in Chicago, New York or St. Louis check out our website at http://www.ValuationStLouis.com Or you can find additional videos on company valuation issues at http://www.YouTube.com/businessvaluationSTL

Business Valuation: Methods the Experts Use to Value a Company

Clients always have questions about how to value a business, business valuations, methods of valuing a company and the process in general. There are a few different methods used by experts when completing a valuation of a company. Income Approach, Asset or Cost Approach and Market Approach.

There are guidelines for each method and comprehensive business valuation analysis which is done for each particular approach. In general, a professional valuation expert has to consider these three approaches. And by professional, I mean an expert with credentials or certifications who are members of organizations which have standards — and the professional has to comply with these standards.

Many times other finance and accounting professionals such as CPAs, business brokers or financial advisors may be able to give you an idea of the value of a company, but they are not necessarily obligated to use any specific business valuation methods.

Typically a company would need a formal valuation if there was some type of litigation involved or if the valuation is going to be attached to a tax return and submitted to the IRS. In these cases the valuation expert needs to understand and conform to the standards.

If you would like more information on business valuations, methods to value a company or how to find reputable business valuation companies in Chicago, New York or St. Louis check out our website at http://www.ValuationStLouis.com Or you can find additional videos on company valuation issues at http://www.YouTube.com/businessvaluationSTL

Getting Divorced? Do You Need to Hire a Divorce Valuation Expert? Kansas City, Chicago, St. Louis

Many people have questions about whether they need a business valuation expert when they’re getting divorced. Most family law cases involve fees for attorneys and experts, and people are always trying to save money — I completely understand.

The thing is…If there is ownership of a small business, shares of a family held business, marketable securities, or if real estate properties owned by both parties, then you probably need an expert to place a value on those assets. You may need a valuation company or real estate appraisal service.

You see, when you go into court and your husband or wife has hired an expert and their expert says that the business and assets are worth millions of dollars or possibly nothing — zero, nada…then you will want to hire an expert who will provide a reasonable value for the same assets. You see, there are company valuation experts out there who will testify to any value — or a value which is beneficial to the client and attorney.

The reality is that the business expert is the servant of the court, judge or jury and the judicial system as a whole– and you will want to find someone who will give an opinion of value that is reasonable and will stand up in court, not just someone who will claim any number.

That being said — if your spouse has an expert who has an opinion of value and you do NOT have an expert who provides another perspective on the value — then the judge is only left with ONE option. Sometimes saving money, but losing all of your assets is not the best route to take in divorce court.

If you own a business in St. Louis and would like to learn more about business valuations for divorce, how to value a company, or how to find a qualified company valuation expert in Kansas City, Chicago or St. Louis, visit our website at http://www.valuationstLouis.com or check out our additional videos at http://www.YouTube.com/businessvaluationstl

Valuation Expert: What Happens After the Company Valuation Expert is Hired?

http://www.ValuationStLouis.com (314) 541-8163 Valuation Expert and Valuation Process – What Happens After the Company Valuation Expert is Hired? What are the steps in the company valuation process and how can the small business owner can be prepared?

Small business owners always have questions about the valuation process. What happens after I hire a company valuation expert?

First the expert is going to give you a list of company information which you need to compile in hard copy or electronic format. Documents such as historical financials, income and expense projections, operating agreements, buy-sell agreements, prior sales transactions within the company, lease agreements are all examples of what the expert will need for the valuation engagment.

One of the first steps for the expert is to review three to five years of historical financial data. This could be income statement and balance sheets audited or reviewed by an accounting firm or CPA, or if you don’t have an accountant then you can supply the expert with tax returns for the company.

The business valuation expert will also want to review your projections for income and expenses. The company valuation expert will meet with you for a couple hours and discuss all facets of your business, including industry and economic issues pertaining to your company.

The expert will develop a report or calculations depending on your specific situation which should take anywhere from 2-6 weeks. It will take time to gather all the pertinent documents for the valuation, so the faster you can get the documents to the expert, the faster they can get going on the work.

If you own a business in St. Louis and would like to learn more about business valuations, how to value a company,  or how to find a qualified company valuation expert in Chicago, New York or St. Louis, visit our website at http://www.valuationstLouis.com or check out our additional videos at http://www.YouTube.com/businessvaluationstl

Valuation Expert: Do You Need a LOCAL Business Valuation Expert? St. Louis, Chicago, Kansas City

Valuation Expert St. Louis: Do You Need a LOCAL Business Valuation Expert? Chicago, Kansas City

If you are looking for a valuation expert, find one you trust with credentials and experience – no matter where they are located. I speak with business owners across the country everyday about valuation issues. Most of the time they are calling from other parts of the country to get a referral for a valuation expert in their area. The question is “do you need a company valuation expert in the area you operate business or not?”

Well, the reality is that you do NOT need a valuation expert in your city. You need an expert who has the credentials to value a closely held company, the experience and better yet — and expert who has defended their work in court or submitted reports to the IRS.

Let’s talk about credentials — you know all those letters behind someone’s name. There are several valuation credentials a person could have such as an AVA or CVA from NACVA, National Association of Certified Valuation Analysts, ASA in business valuation, from the American Society of Appraisers or ABV, accredited in business valuation, which you can attain from the AICPA if you also have a CPA. No credential is better than the other one — really, but you want to make sure the expert has a valuation credential.

Next you want to make sure they have experience. It doesn’t necessarily have to be in your specific field or business industry, but they should have experience in valuing businesses in general. Also, ask the expert if they have ever had to testify in court about their valuations or submit their reports to the IRS — why is this important?

Well, when you testify in court, you need to stay current with valuation methodology and changes in the valuation industry. Same with submitting the reports to the IRS. You need to be able to defend your approach and valuation methods, which makes you really have to know what you are doing.

Now if you find someone who you know has the valuation credentials, experience in valuing business and also has defended their work in court, you might have a great expert. And if this expert is not in your city — they are usually only a quick flight away.

Most valuation work can be accomplished over the phone and through the internet. Work with someone you trust who can work within your budget, don’t worry about where their physical office is located.

If you own a business or real estate assets and would like to learn more about business valuations, how to gift shares of your company, or how to find a qualified business valuation expert in Chicago, Kansas City or St. Louis, visit our website at http://www.ValuationStLouis.com (314) 541-8163 or check out our additional videos at http://www.YouTube.com/businessvaluationstl

Business Valuation Services St. Louis: Asking About Industry Experience and Credentials – Valuation Reports St. Louis

Asking About Industry Experience and Credentials- Does the valuation expert need experience in a specific industry in order to provide valuation services? Business Valuation Services St. Louis

Small business owners always have questions about company valuation issues: one of the main questions is “Do I need a valuation expert with experience valuing companies in MY industry?”

Well the answer is yes and no. For the most part a person who specializes in valuing businesses knows how to value most types of companies. Many of the same valuation methods apply to a manufacturing companies, professional services firms or product distributors.

The valuation expert looks at three approaches: Asset Approach, Income Approach and Market Approach. In short the analyst will look at the assets, liabilities and equity of the firm for the asset approach. The income and expenses in an income approach or other market transactions in your industry for the market approach.

Essentially other companies who have been bought or sold in recent years. So no matter what you do, or service you provide the valuation methods are similar. So someone who is accredited in valuation theory will understand how to value most companies.

That being said there are times when you may want someone with experience in your industry. Life Sciences companies, hospitals, and emerging technology firms are some examples of when you would seek out a professional who specializes in these fields.

So it is good to question an expert about their experiences — but also question them about their valuation credentials. This factor may be of more importance.

If you own a small business and would like to learn more about business valuations, how to sell your company, how to value a company, or how to find a qualified business valuation expert, visit our website at http://www.ValuationstLouis.com or check out our videos at http://www.YouTube.com/businessvaluationstl