Maximizing value from the purchase of a business requires a detailed understanding of valuation methods. The Business Valuation course provides insights into the circumstances under which different valuation methods should be used, and discusses how to sort out those situations in which a range of valuations are indicated. The course goes on to describe how to value intangible assets, a number of valuation adjustment factors, valuation mistakes, and similar topics. In short, the course is a valuable reference for anyone seeking a better understanding of how much a business is worth.
Upon successful completion of this course, participants will be able to:
- Identify the situations in which a business valuation may be needed.
- Cite the presence of going concern indicators.
- Identify the calculation methods used for each of the valuation methodologies.
- Cite how the cost of capital is derived, including the proper derivation of beta.
- Cite how scenario analysis can be used to refine the discounted cash flows model.
- Identify the circumstances under which premiums and discounts are applied to a valuation.
- List the different types of intangible assets.
- Identify the different methods available for assigning valuations to intangible assets.
Table of Contents
Chapter 1 – Business Valuation
The Difference between Value and Price
Major Valuation Approaches
The Going Concern Concept
Real Estate Value
Asset Accumulation Method
Discounted Cash Flows
Post Five-Year Cash Flows
Negotiation of DCF Contents
Adjustments to DCF
The Discount Rate
When DCF Fails
The Comparison of Sales Multiples
The Comparison of Cash Flows
The Comparison of Contract Revenues
Influencer Price Point
The Initial Public Offering Valuation
The Strategic Purchase
Extraneous Valuation Factors
The Control Premium
The Lack of Control Discount
The Lack of Marketability Discount
The Key Person Discount
The Portfolio Discount
The Choice of Valuation Methods to Use
The Valuation Floor and Ceiling
Chapter 1 – Review Questions
Chapter 2 – Additional Valuation Topics
Valuation of Intangibles
Incremental Cash Flow Analysis
Intangible Asset Useful Lives
Excess Earnings Method
Comparable Pricing Method
Excess or Deficient Assets
Adjustments for Business Risk
Multiples Using Seller’s Discretionary Earnings
Rules of Thumb
Chapter 2 – Review Questions
Review Question Answers and Rationales
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