Business
Valuation for
Houston and Texas Businesses
Business enterprise Valuations are frequently required for Business Acquisitions, Buy-Sell arrangements, Commercial Litigation, Divorce Negotiations, Estate Planning, insurance policy Claims, Partnership breakup, Limited Partnership conveyances, and Minority stockholder Disputes.
If you require a Business Valuation, we can help.
Call Us at 713-661-1040.
Business Valuation Topics:
Types of Business
Valuations
Price of Business Valuations
What is Fair Market Value in a Business enterprise Valuation?
Business Valuation Methodologies
Going Concern Valuation Summary
Going Concern Value - Income Approach
Going Concern Value - Asset Based Approach
Going Concern Value - Market Approach
Liquidation Value
Small Business Valuation
Types
of Business Valuations
Business
Valuations can be performed as either a Calculation Engagement or
as a Valuation Engagement. The level of effort, and consequently the
price, will change depending on the engagement type chosen.
Calculation
Engagement:
In a calculation engagement the valuation analyst (some of the times called the appraiser) agrees with his customer about the process and valuation method to be used to estimate value for the subject interest. The valuation analyst executes a series of computations employing the agreed methodology to arrive at a valuation that complies with the agreed approach to value. A calculation engagement is a considerably subordinate degree of service than a valuation engagement.
Valuation
Engagement:
In a valuation engagement the
valuation analyst (some of the times called the appraiser) has
the freedom to research multiple approaches to valuation and
to employ those specific valuation processes and approaches
the valuation analyst deems most pertinent for the situation.
This is normally a much more time consuming (and consequently
costly) operation; and they're by and large considered to be
a more correct conclusion of value.
Cost
of Business Valuations
Business valuations can
vary greatly in price dependent on complexity and amount of
assets that constitute the "subject interest" or business
enterprise be appraised. Likewise the choice between executing
a calculation engagement or valuation engagement, the availability
of books, and the type of report to be released will greatly
determine the price of appraisal.
Though
all business valuations will be different, standard level
calculation engagements or limited partnership valuation engagements
appraisals will commonly cost between $3,000 to $10,000; whereas
complete valuation engagements often cost between $7,500 to
$35,000.
One word
of caution. Always beware of a "low price" appraisal or "bargain
basement" appraiser. A lot of people have found out the hard
way that cutting corners on a business valuation could be
disastrous to the outcome their litigation when a Court rejects
a sloppy valuation, or it breaks down under IRS scrutiny,
or courtroom cross examination.
What
is the definition of Fair Market Value in a Business Valuation
The most normally
used definition of fair market value applied in business appraisals
is located in Revenue Ruling 59- 60. This revenue ruling defines
fair market value as
“….the
price at which the property would change hands between a willing
buyer and a willing seller when the former is not under any
compulsion to buy and the latter is not under any compulsion
to sell, both parties having reasonable knowledge of relevant
facts, which is best described as what would a willing buyer
pay, and what would a willing seller accept, neither acting
under duress for a sale of the business."
Business
Valuation Formula
Generally
a Business Valuation seeks to determine the Fair Market Value
of the "Subject interest" which is either an entire business
enterprise, or a percentage of, or fractional ownership interest
in, a business enterprise.
