Understanding Business Valuation, 6th Edition.

Format:

Book

Author/Creator:

Trugman, Gary R.

Language:

English

Subjects (All):

Business brokerage.

Finance.

Physical Description:

1 online resource (1187 pages)

Edition:

6th ed.

Place of Publication:

Portland : Business Valuation Resources, LLC, 2022.

Summary:

This book, authored by Gary R. Trugman, provides a comprehensive guide to business valuation. It aims to explain valuation theory and its application in a practical manner for valuation analysts. The author emphasizes a straightforward approach, avoiding complex mathematical formulas and focusing on key concepts. Targeted towards professionals in the field, the book includes real-world examples and exhibits to illustrate points. Trugman aims to demystify the subjective process of business valuation, highlighting the importance of context and the interconnectedness of various valuation elements. Readers are encouraged to follow the book sequentially to fully grasp the concepts presented. Generated by AI.

Contents:

Intro

Preface

Acknowledgments

Introduction

DOWNLOADABLE MATERIALS

STEPS OF A BUSINESS VALUATION

NOTATION SYSTEM USED IN THIS BOOK

Chapter 1. Overview of Business Valuation

LEARNING OBJECTIVES

INTRODUCTION

A BRIEF WALK DOWN MEMORY LANE

WHY ARE BUSINESSES VALUED?

MERGERS, ACQUISITIONS, REORGANIZATIONS, SPIN-OFFS, LIQUIDATIONS, AND BANKRUPTCY

ALLOCATION OF PURCHASE PRICE

ESTATE, GIFT, AND INCOME TAXES

MARITAL DISSOLUTION

EMPLOYEE STOCK OWNERSHIP PLANS

BUY-SELL AGREEMENTS

OWNERSHIP DISPUTES

FINANCING

AD VALOREM TAXES

INCENTIVE STOCK OPTION (EQUITY) CONSIDERATIONS

INITIAL PUBLIC OFFERINGS

DAMAGES LITIGATION

INSURANCE CLAIMS

CHARITABLE CONTRIBUTIONS

EMINENT DOMAIN ACTIONS

FAIRNESS OPINIONS

WHO VALUES BUSINESSES?

BUSINESS VALUATION ANALYSTS

ACCOUNTANTS (CPAs)

BUSINESS BROKERS

COLLEGE PROFESSORS

COMMERCIAL REAL ESTATE APPRAISERS

INVESTMENT BANKERS

INDUSTRY EXPERTS

THE INTERNET

PROFESSIONAL VALUATION ORGANIZATIONS

THE AICPA

THE AMERICAN SOCIETY OF APPRAISERS

THE NATIONAL ASSOCIATION OF CERTIFIED VALUATORS AND ANALYSTS

THE CFA INSTITUTE

THE APPRAISAL FOUNDATION

CONCLUSION

Chapter 2. Business Valuation Standards

AICPA STATEMENT ON STANDARDS FOR VALUATION SERVICES NO. 1

WHY ISSUED

VALUATION OF A BUSINESS, BUSINESS OWNERSHIP INTEREST, SECURITY, OR INTANGIBLE ASSET

INTRODUCTION AND SCOPE

OVERALL ENGAGEMENT CONSIDERATIONS

DEVELOPMENT

THE VALUATION REPORT

EFFECTIVE DATE

VS SECTION 9100, VALUATION OF A BUSINESS, BUSINESS OWNERSHIP INTEREST, SECURITY, OR INTANGIBLE ASSET: VALUATION SERVICES INTERPRETATIONS OF SECTION 100

SCOPE OF APPLICABLE SERVICES

AICPA STATEMENT ON STANDARDS FOR CONSULTING SERVICES

AICPA CODE OF PROFESSIONAL CONDUCT.

PROFESSIONAL COMPETENCE

ASA STANDARDS

UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE

NACVA

GLOSSARY OF BUSINESS VALUATION TERMS

Chapter 3. Getting Started

LEARNING ABOUT THE ENGAGEMENT

DECIDING WHETHER TO ACCEPT THE ENGAGEMENT

CONFLICTS OF INTEREST

PURPOSE AND FUNCTION OF THE ENGAGEMENT

AMOUNT OF TIME REQUIRED TO DO THE JOB

THE SCOPE OF THE ASSIGNMENT

THE TYPE OF REPORT TO BE ISSUED

ENGAGEMENT LETTERS

DESCRIPTION OF THE SCOPE OF THE ASSIGNMENT

DETAILED DESCRIPTION OF THE VALUATION SUBJECT

STANDARD OF VALUE THAT WILL BE USED, INCLUDING THE DEFINITION OF THAT STANDARD

EFFECTIVE DATE(S) OF THE VALUATION

TYPE OF REPORT THAT WILL BE ISSUED TO COMMUNICATE THE VALUE ESTIMATE

CLIENT RESPONSIBILITIES

METHOD OF DETERMINING FEES AND THE TERMS OF PAYMENT

THE FIVE STEPS OF A VALUATION ASSIGNMENT

ENGAGEMENT LETTER CONSIDERATIONS FOR LITIGATION REPORTS

THE INITIAL DOCUMENT REQUEST

USING A STANDARD CHECKLIST

SETTING UP MULTIPLE CHECKLISTS

Chapter 4. Valuation Principles and Theory

PRINCIPLES OF VALUATION

PRINCIPLE OF ALTERNATIVES

PRINCIPLE OF SUBSTITUTION

PRINCIPLE OF FUTURE BENEFITS

STANDARDS OF VALUE

FAIR MARKET VALUE

FAIR VALUE

INVESTMENT VALUE

INTRINSIC VALUE

HOW THE PURPOSE OF THE VALUATION INFLUENCES THE STANDARD OF VALUE

SUBSEQUENT EVENTS (KNOWN OR KNOWABLE)

IRS INFLUENCE ON BUSINESS VALUATIONS

REVENUE RULING 59-60

REVENUE RULING 65-192

REVENUE RULING 65-193

REVENUE PROCEDURE 66-49

REVENUE RULING 68-609

REVENUE PROCEDURE 77-12

REVENUE RULING 77-287

REVENUE RULING 83-120

REVENUE RULING 85-75

REVENUE RULING 93-12

TECHNICAL ADVICE MEMORANDUM 94-36005

CHAPTER 14 OF THE IRC

CONCLUSION.

Chapter 5. Data Gathering

WHAT ITEMS AFFECT VALUE?

INTERNAL INFORMATION

NONFINANCIAL INFORMATION

FINANCIAL INFORMATION

EXTERNAL INFORMATION

ECONOMIC DATA

INDUSTRY DATA

PUBLICLY TRADED GUIDELINE COMPANY DATA

OTHER SOURCES OF DATA

THE ON-SITE INTERVIEW

Chapter 6. Data Analysis

ECONOMIC ANALYSIS

INDUSTRY ANALYSIS

PORTER'S FIVE FORCES

OTHER CONSIDERATIONS

SUBJECT COMPANY ANALYSIS

SWOT ANALYSIS

FINANCIAL ANALYSIS

COMPARATIVE COMPANY ANALYSIS

COMMON SIZE FINANCIAL STATEMENTS

FINANCIAL RATIOS

COMPARATIVE INDUSTRY ANALYSIS

TREND ANALYSIS

OPERATIONAL ANALYSIS

FINANCIAL STATEMENT ADJUSTMENTS

CONVERSION OF CASH OR INCOME TAX BASIS TO GAAP

TAX RETURN ADJUSTMENTS

UNDERSTANDING FINANCIAL STATEMENTS FOR VALUATION PURPOSES

ANALYSIS OF HISTORICAL BALANCE SHEETS

ANALYSIS OF HISTORICAL INCOME STATEMENTS

BARDAHL ANALYSIS

NORMALIZATION ADJUSTMENTS

COMPARABILITY ADJUSTMENTS

NONOPERATING AND NONRECURRING ADJUSTMENTS

DISCRETIONARY ADJUSTMENTS

NONCONTROLLING INTEREST VALUATIONS

Chapter 7. Statistics for Valuation and Economic Damages

POPULATION AND SAMPLE: DESCRIPTIVE AND INFERENTIAL STATISTICS

DISCRETE AND CONTINUOUS VARIABLES

FREQUENCY DISTRIBUTIONS AND MEASURES OF VARIATION

CENTRAL TENDENCY (MEAN, MEDIAN, MODE, AND SO FORTH)

RELATION BETWEEN MEAN, MEDIAN, AND MODE

RELATION BETWEEN ARITHMETIC, GEOMETRIC, AND HARMONIC MEANS

QUARTILES, DECILES, AND PERCENTILES

VARIATION

PROBABILITY

CORRELATION

LET'S DO SOME NUMBER CRUNCHING

CALCULATION OF THE MEAN

CALCULATION OF THE HARMONIC MEAN

CALCULATION OF THE STANDARD DEVIATION

CALCULATION OF THE COEFFICIENT OF VARIATION.

CALCULATION OF MEDIAN AND PERCENTILE

BE CAREFUL NOT TO DRINK THE STATISTICS KOOL-AID: THIS STUFF CAN BE MISLEADING

Chapter 8. Developing Forecasts for Business Valuations and Economic Damages

FORECAST VERSUS PROJECTION

MANAGEMENT'S FORECAST

FACTORS TO CONSIDER WHEN EVALUATING MANAGEMENT'S FORECAST

COMPANY-SPECIFIC FACTORS

ECONOMIC CONDITIONS

INDUSTRY TRENDS

PREPARING THE FORECAST

THE SALES FORECAST

REVENUE FACTORS FOR CERTAIN INDUSTRIES

SALES FORECASTING TECHNIQUES

AVERAGE HISTORICAL GROWTH RATE

LINEAR REGRESSION MODELS

MONTE CARLO SIMULATION

PROJECTING SALES FOR A NEW BUSINESS

COST OF GOODS SOLD

OPERATING EXPENSES

DEPRECIATION AND CAPITAL EXPENDITURES

INTEREST EXPENSE AND BORROWING NEEDS

BALANCE SHEET FORECAST

APPLICABLE STANDARDS FOR FORECASTS IN BUSINESS VALUATION AND ECONOMIC DAMAGE ASSIGNMENTS

COURT ACCEPTANCE

Chapter 9.The Market Approach-Part I

GUIDELINE PUBLIC COMPANY METHOD

CREATING A LIST OF POTENTIAL GUIDELINE COMPANIES

GET THE BUSINESS DESCRIPTION

SIZE CRITERIA

FOR THOSE THAT PASS MUSTER …

USING VALUATION MULTIPLES

PRICE-TO-NET EARNINGS

PRICE-TO-PRETAX EARNINGS

PRICE-TO-CASH FLOW

MVIC-TO-SALES

PRICE-TO-DIVIDEND OR DIVIDEND-PAYING CAPACITY

PRICE-TO-BOOK VALUE

VALUING INVESTED CAPITAL INSTEAD OF EQUITY

ADJUSTING PUBLIC COMPANY MULTIPLES FOR RISK

VALUATION CONSIDERATIONS

WHAT PRICE DO WE USE IN THE MULTIPLES?

REGRESSION ANALYSIS

ADJUSTING MULTIPLES BASED ON SGLPTL

MAKING QUANTITATIVE ADJUSTMENTS TO MULTIPLES

ADJUSTING THE MARKET MULTIPLE FOR SIZE

ADJUSTING THE MARKET MULTIPLE FOR GROWTH

HOW TO CALCULATE THE PRESENT VALUE WEIGHTED PERPETUAL GROWTH RATE.

ADVANTAGES OF USING THE GUIDELINE PUBLIC COMPANY METHOD

DISADVANTAGES OF USING THE GUIDELINE PUBLIC COMPANY METHOD

SO LET'S BE HONEST …

LET'S DEMO TAGNIFI

Chapter 10. The Market Approach-Part II

MERGER AND ACQUISITION (TRANSACTION) METHOD

VALUSOURCE MARKET COMPS (IBA)

BIZCOMPS

DEALSTATS

VALUSOURCE M&amp

A COMPS DATABASE

FACTSET MERGERSTAT/BVR CONTROL PREMIUM STUDY

RETIVIA MERGERS &amp

ACQUISITIONS

TRANSACTION ANALYSIS

QUALITATIVE ANALYSIS

QUANTITATIVE ANALYSIS

LET'S GET BACK TO VALUATION THEORY

ADVANTAGES OF USING THE MERGER AND ACQUISITION METHOD

DISADVANTAGES OF USING THE MERGER AND ACQUISITION METHOD

INTERNAL TRANSACTIONS

INDUSTRY METHOD

Chapter 11. The Asset-Based Approach

COMMON APPLICATIONS OF THE ASSET-BASED APPROACH

ADVANTAGES AND DISADVANTAGES OF THE ASSET-BASED APPROACH

VALUATION METHODS

ADJUSTED BOOK VALUE METHOD

ECONOMIC OBSOLESCENCE

LIQUIDATION VALUE METHOD

COST-TO-CREATE METHOD

WORKING WITH OTHER APPRAISERS

HOW TO LOCATE AND RECOGNIZE SPECIALISTS

Chapter 12. The Income Approach

VALUE IS FROM AN INVESTOR'S VIEWPOINT

ADVANTAGES AND DISADVANTAGES OF THE INCOME APPROACH

ADVANTAGES

DISADVANTAGES

SELECTING BENEFIT STREAMS

THE NATURE OF THE BUSINESS AND ITS CAPITAL STRUCTURE

THE PURPOSE AND FUNCTION OF THE VALUATION

THE PARTICULAR SUBJECT OF THE VALUATION

USING PRETAX OR AFTER-TAX INFORMATION

USING CASH FLOW INSTEAD OF EARNINGS

DEFINING CASH FLOW

FORECASTING FUTURE BENEFIT STREAMS

INCOME APPROACH METHODS

CAPITALIZATION OF BENEFITS METHOD

DISCOUNTED FUTURE BENEFITS METHOD.

THE EXCESS EARNINGS (FORMULA) METHOD.

Notes:

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Part of the metadata in this record was created by AI, based on the text of the resource.

Other Format:

Print version: Trugman, Gary R. Understanding Business Valuation, 6th Edition

ISBN:

9781621502357

OCLC:

1321792947