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All business owners will one day sell their business.  For those that are prepared this will occur voluntarily, on their terms at a time of their choosing.  For many business owners, however, this will occur involuntarily due to burnout, illness, disability, divorce or death. Are you looking to sell your business within the next five years?  If so, the time to act is now.  You and your business need ample time to prepare for this event – and there are things business owners need to kn...

Is the valuation based on a going concern income-based approach such as a discounted cash flow approach (DCF) or capitalized cash flow approach (CCF)?  If so, what discount rates or capitalization rates are the value conclusions based upon? Step 6 to reviewing a business valuation report involves assessing the reasonableness of the selected discount rates or capitalization rates (or "cap rates"). Although discount rates and cap rates are related terms, they are not interchangeable.  For clar...

Is the valuation based on a going concern income-based approach?  If so, what future cash flow assumptions are the value conclusions based upon? The reasonableness of the underlying cash flow assumptions can significantly affect the integrity of the resulting value conclusions.  Under common income-based valuation approaches, the business valuator must select an operating cash flow level (or range) that he/she expects the business to generate going forward.  The cash flows may vary from y...

How many different valuation approaches are there?  How does a valuator select which valuation approach to apply?  What if the valuator adopted an incorrect valuation approach? The business valuator is responsible for selecting an appropriate valuation approach and for ensuring that it has been correctly applied.  Step 4 to reviewing a business valuation report involves identifying and assessing the valuation approach adopted by the valuator. In valuing a business, there are many valuation...

How reliable is a valuation that was rendered based on a restricted or limited scope of review? Is the quality of a valuation report affected by the extent to which the valuator was restricted from examining certain key documents and/or interviewing key parties? The third step to reviewing a business valuation report involves identifying any major scope limitations, restrictions and qualifications rendered on the value conclusions. This helps ascertain whether or not the valuator conducted suff...

Advisors Seeking Knowledge

VSP professionals co-author Chapter 27 - The Importance and Role of Business Valuations and Exit Planning in "Advisors Seeking Knowledge - A Comprehensive Guide to Succession and Estate Planning", published by Lexis Nexis 2012. to Download Release info.

What qualifies someone to be an expert in business valuation?  Will the quality of a valuation report be affected by the qualifications of the valuator?  The second step to reviewing a business valuation report involves reviewing the business valuator’s credentials and qualifications.
 

Implementing an effective value enhancement program will increase the attractiveness of your business to a potential purchaser and provide a significant return on your investment.  Implementation, however, is the key.  Many business owners appreciate the importance of a good action plan, but successful business owners excel at implementing the action plan.