Factors in Determining the Level of Future Maintainable Earnings
Valuations are dependent upon a number of subjective assumptions. One of the main assumptions involves the level of expected future profitability. It is common to see as a basis for future earnings the average of the previous three years. Whilst the average of the previous three years may be appropriate, the reasons for choosing that [...]
Future Maintainable Earnings – Business Valuation Methodologies
The Future Maintainable Earnings (FME) methodology is the most common method of valuing profitable businesses in Australia. The future maintainable earnings methodology is a derivation or simplification of the Discounted Cash Flow (DCF) method. Whilst the discounted cash flow methodology is considered to be superior in determining the value of a business, the information available in [...]
Going Into Business With Friends
As forensic accountants, we often see the results of poor partnerships, ones that aren’t planned properly and that end in tears and litigation. Many people will say “don’t go into business with friends, it will just end in tears” but partnerships have a four times greater chance of success than a sole proprietor. A sole [...]
Phoenix Company Investigations
We were recently engaged by the liquidators of a security company to determine the value of goodwill arising from the transfer of the business to a phoenix company.
Using the Internet for Litigation Research
We use Google and the internet as a valuable research tool in almost all our forensic accounting litigation matters. The information available enables us to check the stories of both the plaintiff and defendant against other sources of information.
Business Goodwill – What is it?
Goodwill is an intangible asset derived from other assets of the business. Its existence depends upon proof that the business generates and is likely to continue to generate earnings from the use of the identifiable assets, locations, people, efficiencies, systems, processes and techniques of the business.