Writer: Lisa Holton and Jim Bates, MBA

Published Year: 2009

ISBN: 978-0-470-34401-9

Page: 363 Pages

Size: 3.7 MB


Part I: What Business Valuation Means

We start by telling you what business valuation is and why we think it’s the first thing you should understand about being in business. We talk about why valuation is such a challenge, and we give you the basic accounting approaches that experts take to uncover value — or the lack of it — in an organization. Last, we talk about the greatest valuation challenge today: how experts evaluate what intellectual property means to an organization.

Part II: Getting Familiar with Valuation Tools, Principles, and Resources

This part is where we spend the most time talking about paperwork, process, and expertise. We talk about what a valuation report looks like and what various professionals do in the valuation process; we offer a primer on financial statements and how they’re used in the valuation process. We also offer an important chapter that talks about rule-of-thumb valuation information — where it can help and where it can mislead.

Part III: If You’re Selling a Business . . .

People sell businesses for lots of reasons. They’re sick of running the business, for example; or they’ve made the business a rousing success that’s ripe for a nice price from a new owner; or they’re ready to retire or to pass on what they’ve built to the next generation. The reasons can vary, but one thing is clear: Planning for the sale of a business is something that you don’t do just a few months in advance. The planning takes years and is best thought of as part of a founder’s overall estate strategy. If you build a business, you want to get the best value for it in a way that allows you to enjoy the full rewards of what you created So if you’re trying to figure out what to do with a family-owned company, this part is for you. Family businesses supply an incredible amount of drama in the valuation process. This part also introduces a detailed case study on the sale of a fictional business.

Part IV: If You’re Buying a Business . . .

Knowing about basic valuation issues is the key to making a deal. Buyers have to do their own planning for a transaction because they may be going into business for the first time or buying another company in a series of companies to complement existing business interests. And of course, buyers have their own succession and estate-planning issues to deal with. In this part, we discuss valuation issues for the buyer and feature another major detailed case study, this one on the purchase of a particular fictional business.

Part V: Don’t Try This at Home! Turning Things Over to the Valuation Experts

The purpose of this part is not to win business for valuation experts, even though we clearly believe that these chapters cover situations in which you need help. The idea is to communicate why the complexity of certain valuation situations should encourage you to seek help. This part includes three chapters that discuss situations in which business owners definitely shouldn’t go it alone. Which situations did we choose? Divorce certainly qualifies because it endangers many family companies. Estate planning and gifting are tied in with the value of the family business;therefore, they need joint coordination. Finally, people need valuation advice when they’re preparing to attract outside investors to a business.

Part VI: The Part of Tens

These three chapters offer ten points of interest each on the following topics: reasons to consider a prenuptial agreement, elements to build into a partnership agreement, and things to consider before transforming a conventional business to an employee stock ownership plan (ESOP).


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