Over the years, I have found too many business valuators try to apply methods appropriate for valuing large public companies such as Home Depot when they are valuing a local hardware store.
This is like trying to value your home by looking at a downtown office building. You could do it but, really, why would you?
So I decided to write “The Art of Business Valuation, Accurately Valuing A Small Business”.
The local hardware store, a very small or typical micro-business, requires different methods and tools than valuing large companies. The companies are not the same and the valuation methods should not be the same either. This problem is most evident in businesses with revenues under $10 million and even more so with businesses with revenues under $5 million. There are better ways available for valuing these smaller businesses. By the way, according to 2012 Census data (the latest available) over 95% of payroll businesses have revenues under $10 million.
This book may be the only business valuation book to really focus on valuing these smaller businesses. Certainly it is the most comprehensive. What you will get from the book is the ability to more accurately prepare or review business valuations of micro and small businesses with data that is really available both inside and outside the business.
In more detail this means you will have a clear understanding of how to apply the most appropriate methods for these very small businesses. While I strongly favor the market method I deal with the complexities of income methods including tax affecting, specific company premiums and more. In addition you will learn methods to address the accounting and cash flow normalization issues so common in small business valuation. Finally, professional judgment and common sense is stressed throughout.
I hope you get a lot out of reading it.