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How to Value a Business-Chapter 7 of the Executive's Guide


The following is an excerpt from The Executive's Guide to Business Valuation by valuation expert and M&A i-banker Justin Kuczmarski, MBA, CPA, CVA, CIRA, ABV. To view this free, 300-page guidebook, please click the blue link above to download.

Most accountants refuse to push the envelope in practicing directly before the IRS. It is similarly not wise for a credentialed CPA valuator to aggressively render valuation opinions for federal tax compliance or in international transfer pricing. Due to stringent tax reporting demands and experience requirements, CPA valuators generally produce the bulk of tax value opinions. CPAs are also more accustomed to the scrutiny of regulatory authorities and the nuances of federal and international tax. Valuation is an art and not a science.

Nevertheless, if major assumptions are consistent, professional valuators analyzing the same company should generally arrive at similar conclusions. In addition, investment bankers often present their final opinions in a range of values. Such ranges exemplify how the various valuation methods should ―triangulate‖ into a defendable conclusion. Details on the various business valuation methods and the triangulation process are presented shortly.

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