A business has a value equal to the expected future economic benefits to its owner, discounted to a present value. This concept has broad acceptance and appears in multiple economic, finance and valuation texts.
When an intangible asset, usually a business ownership interest such as stock, is valued, the report will necessarily reflect the professional judgment of the appraiser. Evaluating the report will be facilitated by the application of rules or principles that are supplied by relevant professional standards.
As the size and complexity of a firm grows, the ability to identify what money (i.e. cash) came and went during a period becomes more daunting.
We have recommended regularly the selection of one “neutral”¹ appraiser selected jointly by opposing parties to resolve valuation disputes. Each party should be advised by a valuation professional not only in the selection of the neutral appraiser but in the assignment to be given to the neutral appraiser. A key aspect of the assignment is […]
When valuing a business under the income method, a discount rate is used to discount future cash flows to present value. This discount rate, also known as the cost of capital, represents the expected rate of return available in the market from other investments that are comparable in terms of risk and other investment characteristics, […]