Cover image for The market approach to valuing businesses
Title:
The market approach to valuing businesses
Author:
Pratt, Shannon P.
Personal Author:
Publication Information:
New York : John Wiley, [2001]

©2001
Physical Description:
xxxix, 356 pages ; 24 cm
Language:
English
Contents:
Defining market multiples and market approach methods. Defining market value multiples -- The guideline public company method -- The guideline merged and acquired company method -- Other market methods -- Finding and analyzing comparative market transaction data. Finding public company market transaction data -- Finding merger and acquisition market data -- Adjusting financial statements -- Comparative financial analysis -- Compiling market value tables and reaching a value conclusion. Compiling useful market value tables -- Selecting, weighting, and adjusting market value multiples --Control premiums and minority discounts -- Discounts for lack of marketability -- Sample market approach cases. Small-size service company sample case- sub shop -- Medium-size service company sample case-software developer -- Important aspects of using the market approach. Reconciling market approach values with income and asset approach values -- Does size matter? Evidence from empirical data -- Common errors in implementing the market approach -- The dismal track record of U.S. market acquisitions -- The market approach in the courts.
ISBN:
9780471359289
Format :
Book

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Summary

Summary

Your Best Approach to Determining Value

If you're buying, selling, or valuing a business, how can you determine its true value? By basing it on present market conditions and sales of similar businesses. The "market approach" to valuing businesses is quickly becoming popular for determining the value of a business or partnership. Praised for its objectivity, the approach is the model most favored by the IRS and the United States Tax Court-as long as it's properly implemented.

With Shannon Pratt's The Market Approach to Valuing Businesses, buyers and sellers can best ensure effective market approach implementation. Designed for anyone who needs to carry out or review a market approach to valuation, this book serves as both practical tutorial and handy desk reference.

In this comprehensive guide, you'll find information on valuing and its applications, case studies on small and midsize businesses, and a detailed analysis of the latest market approach developments as well as:

A critique of U.S. acquisitions over the last 20 years An analysis of the effect of size on value Common errors in applying the market approach Court reactions to the market approach Must-reading for anyone who owns or holds a partial interest in a small or large business or a professional practice, The Market Approach to Valuing Businesses will show you how to successfully reach a fair agreement.
www.wiley.com/accounting


Author Notes

SHANNON P. PRATT is a founder and managing director of Willamette Management Associates, the managing owner of Business Valuation Resources, LLC, and a member of the board of directors of Paulson Capital Corp. He holds a doctorate in business administration from Indiana University. Dr. Pratt is author of Business Valuation Body of Knowledge: Exam Review and Professional Reference (Wiley); Cost of Capital: Estimation and Applications (Wiley); and The Lawyers Business Valuation Handbook. He is coauthor of Valuing a Business: The Analysis and Appraisal of Closely Held Companies, Fourth Edition; Valuing Small Businesses and Professional Practices, Third Edition; and Guide to Business Valuations, Tenth Edition.

Contributors:
STACY ISON ("The Market Approach in the Courts," Chapter 19) is managing editor of Shannon Pratt's Business Valuation Update(tm). DOUG TWITCHELL ("Comparative Financial Analysis," Chapter 8; "Compiling Useful Market Value Tables," Chapter 9) and CHAD PHILLIPS (sample cases, Chapters 13 and 14) are comanagers of Pratt's Stats(tm). ALINA NICULITA, an intern at Business Valuation Resources, LLC, prepared Appendices A and B. Z. CHRISTOPHER MERCER ("The Quantitative Marketability Discount Model," Appendix D) is CEO of the Mercer Capital business appraisal firm. PAUL HEIDT, a financial analyst at Business Valuation Resources, LLC, compiled Appendix E.


Table of Contents

List of Exhibits
Foreword
Preface
Acknowledgments
Notation System Used in This Book
Introduction
Part I Defining Market Multiples and Market Approach Methods
1 Defining Market Value Multiples
2 The Guideline Public Company Method
3 The Guideline Transaction (Merged and Acquired Company) Method
4 Other Market Methods
Part II Finding and Analyzing Comparative Market Transaction Data
5 Finding Public Company Market Transaction Data
6 Finding Merger amd Acquisition Market Data
7 Adjusting Financial Statements
8 Comparative Financial Analysis
Part III Compliling Market Value Tables and Reaching A Value Conclusion
9 Compiling Useful Market Value Tables
10 Selecting, Weighting, and Adjusting Market Value Multiples
11 Control Premiums and Minority Discounts
12 Discounts for Lack of Marketability
Part IV Sample Market Approach Cases
13 Small-Size Service Company Sample Case-Sub Shop
14 Medium-Size Service Company Sample Case-Software Developer
Part V Important Aspects of using The Market Approach
15 Reconciling Market Approach Values with Income and Asset Approach Values
16 Does Size Matter? Evidence from Empirical Data
17 Common Errors in Implementing the Market Approach
18 The Dismal Track Record of U.S. Market Acquisitions
19 The Market Approach in the Courts
Appendix A Bibliography
Appendix B Data Resources
Appendix C International Glossary of Business Valuation Terms
Appendix D The Quantitative Marketability Discount Model
Appendix E Pratt's Stats TM
Data Contributors
Index