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Chapter 3 - Economic and Industry Analysis


IACAM has created an essential list illustrating the core concepts of public and private business valuation. These key principles can be found in the free, online-version of The Executive's Guide to Business Valuation. To view this free IACAM executive guide, please click the blue link above.

Economic Data - Overview

Why  is  it  critical  to  have  a  custom  industry  and  economic  section  included  in  a valuation report? For starters, IRS examiners who review valuations, whether business valuations   or   real   estate   appraisals,   often   rigorously   scrutinize   these   report components. It is rumored that IRS examiners will perform detailed Internet searches to  substantiate  key  industry  trends.  IRS  valuators  will  inspect  the  economic  and industry  sections  of  a  report  to  ascertain  the  interrelationships,  if  any,  amongst  the local   industry   or   economy   and   the   subject   company.  

Consequently,   sufficient microeconomic details on the local economic landscape are often very important. This is  particularly  valid  if  the  business  has  less  than  $1  million  in  sales  since  such  an enterprise may often sell solely to local clients. 

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