The Art of Business Valuation - by Gregory R Caruso (Hardcover)

About the Book

"This book provides a comprehensive framework for small business valuation, with a specifc focus on topics and problems that confront valuators of smaller businesses as opposed to larger ones. Current valuation literature focuses on larger more complex businesses and business valuations, the small business market is relatively unaddressed. For example, larger businesses almost always have at least Reviewed Accrual Accounting statements as a starting point. What a blessing compared to smaller businesses that rarely have properly reviewed and updated financials. Yet no one has addressed the issues and solutions arising from having to work from less reliable data. This challenge impacts every part of the business valuation. In addition to showing how to work with lesser quality financials statements, this book will also examine: Is this a business or a job? How much research and work papers are enough to comply with standards (i.e., how much is there to know and write about a Burger King?) How to work from cash basis statements when businesses have large receivables and poor cutoffs? Market method or Income method? Must I provide an Opinion of value or can a Calculation suffice? How do we calculate personal goodwill? This book will address those challenges and others head-on and provide solutions to many unaddressed everyday problems encountered when valuing a small business."--

Book Synopsis

Starting from the practical viewpoint of, "I would rather be approximately right than perfectly wrong" this book provides a commonsense comprehensive framework for small business valuation that offers solutions to common problems faced by valuators and consultants both in performing valuations and providing ancillary advisory services to business owners, sellers, and buyers.

If you conduct small business valuations, you may be seeking guidance on topics and problems specific to your work. Focus on What Matters: A Different Way of Valuing a Small Business fills a previous void in valuation resources. It provides a practical and comprehensive framework for small and very small business valuation (Companies under $10 million of revenues and often under $5 million of revenues), with a specialized focus on the topics and problems that confront valuators of these businesses.

Larger businesses typically have at least Reviewed Accrual Accounting statements as a valuation starting point. However, smaller businesses rarely have properly reviewed and updated financials. Focus on What Matters looks at the issue of less reliable data, which affects every part of the business valuation. You'll find valuation solutions for facing this challenge.

As a small business valuator, you can get direction on working with financial statements of lower quality. You can also consider answers to key questions as you explore how to value each small business.

• Is this a small business or a job?
• How much research and documentation do you need to comply with standards?
• How can you use cash basis statements when businesses have large receivables and poor cutoffs?
• Should you use the market method or income method of valuation?
• Techniques that improve reliability of the market method multiplier
• How might you tax affect using the income method with the advent of the Estate of Jones and Section 199A?
• Do you have to provide an opinion of value or will a calculation work?
• How do you calculate personal goodwill?
• As a valuation professional how can you bring value to owners and buyers preparing to enter into a business sale transaction?
• How does the SBA loan process work and why is it essential to current small business values?
• What is the business brokerage or sale process and how does it work?
• How do owners increase business value prior to a business sale?

This book examines these and other questions you may encounter in your valuation process. You'll also find helpful solutions to common issues that arise when a small business is valued.

From the Back Cover

With this insightful and authoritative resource, author Gregory R. Caruso explains to readers why valuing small and very small businesses is different from valuing larger ones. He also describes, in practical and concrete detail, how to do it effectively.

The Art of Business Valuation: Accurately Valuing a Small Business is written in a straightforward and accessible style. Throughout the entire book, the author consistently applies a basic question to each of the business valuation methods he investigates: Does this make sense?

Market, asset, and income approaches to business valuation are all discussed in detail, as is the valuation of partial interests in small businesses and goodwill in a small business. The author also comprehensively examines common small and very small business accounting issues and details that should not be overlooked by business valuators assisting small business buyers and sellers. Finally, and especially valuable to the small business owner and advisors, The Art of Business Valuation includes a detailed description of how a business valuation should be reviewed and critiqued.

There are many books about business valuation, but nearly all of them focus on medium- to large-sized companies. By keeping the focus on small and very small businesses, this book provides a one-of-a-kind resource for anyone required to put a number to the worth of their business. It provides indispensable advice with respect to which of the commonly used valuation approaches and methods work for small and very small businesses.

This work also includes two websites that contain related materials including calculations, checklists, and sample reports demonstrating concepts from the book.

The book is perfect for both new and experienced business valuators, certified public accountants, business analysts, business owners, small business attorneys, and business brokers. It belongs on the shelf of anyone who hopes to get a clearer financial picture of a small business, whether their own or someone else's.

About the Author

GREGORY R. CARUSO, JD, CPA, CVA, is a Partner at Harvest Business, LLC. He has been a business valuator, real estate broker, business broker, transactional attorney, and business owner. For 20 years he has provided business brokerage and business valuation services. He is Editor in Chief of "Around the Valuation World," the NACVA's monthly continuing education webinar.