Thursday, May 7, 2015



Appraisal for Business Valuation

For an appraisal method to work it must address the following:
  • The profitability of the business
  • The tangible assets of the business
  • The presence of intangible assets
  • The value derived should represent the market value
  • Have flexibility to allow for the terms of the sale
  • Simplicity - Usable and understandable
 Components in a business that have value: 
  • A functioning business with modest growth
  • Skilled employees
  • Working equipment
  • Adequate usable inventory
  • A quality product or service
  • A profit
  • Collectable receivables
  • A broad customer base with no very large customer
  • Some new product development capabilities
  • A good reputation (name) in the market place
  • A clean, adequately sized work area
  • A financially sound operation with a good accounting system
  • The business located correctly for its market place
  • A good base of suppliers
 Profit and asset based components: 
  • Profit based items
    • business profit
    • a functioning business
    • business size - gross sales
    • intangible assets
      • skilled employees
      • a quality product or service
      • a broad customer base - customer list
      • new product development capabilities
      • a good reputation - business name
      • good financial management
  • Asset based items
    • inventory
    • patents
    • equipment
    • trademarks
    • receivables
    • real estate
    • contracts

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