business valuation

Factors in Determining the Level of Future Maintainable Earnings

by Arnold Shields 27 January 2010

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 basis are often not given [...]

Read the full article →

Understanding the Capitalisation Factor – Business Valuations

by Arnold Shields 27 January 2010

The most common method of valuing small profitable businesses is the Future Maintainable Earnings (FME) method. The formula for calculating the value of a business is: Future Maintainable Earnings X Capitalisation Factor = Value of Business The capitalization factor is defined as: “any multiple or divisor used to convert anticipated economic benefits of a single period into value.” That definition [...]

Read the full article →

Future Maintainable Earnings – Business Valuation Methodologies

by Arnold Shields 21 January 2010

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 a small business is not sufficiently reliable [...]

Read the full article →

Surplus Assets in Business Valuations

by Arnold Shields 18 January 2010

As part of the process of valuing a company, we revalue the balance sheet of a company from book value to market value and then separate the assets and liabilities of the company into three categories:

Business Assets and Liabilities
Surplus Assets & Liabilities
Financing Liabilities

Read the full article →

Business Valuations – Value to the Owner?

by Arnold Shields 17 November 2009

The purpose of business valuations in Family Law is ascertain “the value to the owner but how does the “value to the owner” differ to that of “fair market value”?

Read the full article →

Business Goodwill – What is it?

by Arnold Shields 1 October 2009

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.

Read the full article →

Business Valuation Rules of Thumb

by Arnold Shields 18 August 2009

Rules of Thumb in business valuations almost always benefit the seller of a business. Rules of thumb are often used to justify or validate the value of a business that is either unprofitable or uneconomic.

Read the full article →
Page 1 of 212