ARTICLES | Business Valuation2021-01-23T08:00:05-05:00

Value and Risk

We have all heard the expression “the greater the risk the greater the reward”. The adage remains true when considering the value of a company. The value of a business is impacted by the amount of risk involved in receiving a future reward. As with all investment decisions, the risk-to-reward tradeoff must be measured. In general, the greater the risk, the lower the current value (and therefore greater future reward) is in the eyes of [...]

Business Valuation: What’s a Business Really Worth?

Business valuation.  How complex can those two words be?  On the surface it would seem that the science of business valuation involves simply applying a formula to a given set of financial data.  A business worth X is always worth X regardless of how you look at it, right?  Not exactly.  In the litigation arena for example, the same business interest may carry different values depending on the purpose of the valuation, applicable case law, [...]

Divorce Valuation: Active vs. Passive Appreciation

In divorce cases, attorneys will often call upon a business valuation expert to distinguish between “active” and “passive” appreciation when deciding how certain spousal assets should be divided and allocated.  The difference is crucial.  A spouse’s interest in a closely-held business often represents the most valuable asset he or she owns and is also often the most complex to value for dissolution purposes, particularly if the spouse owned the business interest prior to marriage.   In [...]

Business Valuations: How to Value the “Cow”

Given the many purposes for valuing a business interest and the various entity structures and standards of value involved, it can often be a daunting task for a business appraiser to develop a proper valuation conclusion. However, most business valuations, regardless of the type of entity, valuation purpose, or ownership characteristics, include one or more of three primary approaches. Surprisingly the logic and methodology behind these three valuation approaches can also [...]

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