A Buy/Sell Clause Helps Prevent Business Divorces from Getting Messy

Business partners set up shop with the best of intentions. It’s a relationship that must be built on mutual trust and respect. But no matter how strong a personal or professional relationship is at the outset, shareholder conflicts and other events may occur that can affect the continuity of the business operations. A mechanism and process that establishes the ground rules for the orderly transfer of the businesses shares caused by unforeseen conflicts or events …

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Restaurant Woes - Serving up a Disappointing Retirement Outlook

Restaurant Woes: Serving up a Disappointing Retirement Outlook

It seems odd that a business owner would work his or her whole life on their business and then determine the business’s value based on what they “think “the business is worth, or an industry rule of thumb. If the sale of your business is going to fund your retirement you should know what your business is worth. Mr. Jones, A Quick Service Restaurant owner, has determined (based on industry rules of thumb, and conversations …

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Your Business may not be Worthas Much as you Think it is ... Yet

Your Business may not be Worth as Much as you Think it is … Yet

Do you know how much your business is worth? And by worth, I mean what price it would realize if it was for sale today. Many times small business owners think their business is worth more than it currently is. This is often referred to as the value gap. If your business represents a significant part of the funding for your retirement, you will want to determine the amount of this gap sooner rather than later. …

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The income approach to determining value

The Income Approach to Determining Business Value

The income approach is often the primary approach used for valuation and is used in the valuation of most operating companies. The income approach discounts the expected future cash flows (returns on investment) to present value using an appropriate rate of return for the investment. Future cash flows are typically based on the net after-tax cash flows expected to be generated by the business. The discount rate (or rate of return) used should reflect the degree of uncertainty or …

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The treatment of the trapped in capital gains in the valuation of holding companies

The Treatment of the Trapped in Capital Gains in the Valuation of Holding Companies

The issue of how to treat the trapped in capital gains most often shows up when applying the Adjusted Net Asset Approach to valuing a holding company. The Adjusted Net Asset Value Approach is typically used when valuing a real estate or investment holding company. This approach results in the book value of the assets and liabilities being restated to reflect their fair market value. The adjusted net book value of the Company is then …

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