A Basic Guide for Valuing a Company, Second Edition
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English

The Groundwork of Company Valuation for First-time Buyers and Sellers

A Basic Guide for Valuing a Company has helped thousands of first-time buyers and sellers realize a fair, substantiated value for small businesses. Now in its Second Edition, this book covers common valuation techniques and myths, tips for determining tangible and intangible values, sample balance sheets and income statements, and approaches to valuing start-up technology and dot-com businesses.

This nuts-and-bolts guide addresses publicly traded and privately held firms, including traditional brick-and-mortar companies and the intellectual property industry. With a clear, concise writing style, the author walks readers through common practices for valuing, from collecting data to arriving at a saleable figure for all types of businesses, including professional practice, manufacturing, wholesale distributors, and a variety of retail operations. This new edition features perspectives on nontraditional valuation practices, guidance for using an excess earnings method, and an abundance of case studies from actual companies.

In order to make the most profitable decisions, before putting a business on the market or making an offer to acquire one, every beginning business purchaser and seller should read A Basic Guide for Valuing a Company, Second Edition.

English

WILBUR M. YEGGE, PhD, has bought and sold five companies, brokered the sale of over 300 small businesses, and valued more than 1,000 others. President of a management consulting firm, he is the author of Self-Defense Finance for Small Businesses and A Basic Guide for Buying and Selling a Company, both published by Wiley.

English

Introduction vii

Chapter 1 Setting the Stage . . . This Business of Valuing Small, Closely Held Companies 1

Chapter 2 Dispelling Perceptions about Value (Because It’s a Rascal We Can’t Really Ignore) 8

Chapter 3 Intangible Values 17

Chapter 4 Industry and Economic Forces 23

Chapter 5 The ‘‘Four Steeds’’ in Business Valuation 29

Chapter 6 Nontraditional Valuation Practitioners 32

Chapter 7 The Data Collection Process 36

Chapter 8 Setting the Records Straight 40

Chapter 9 Valuation Techniques 46

Chapter 10 Practicing with an Excess Earnings Method 61

Prelude to Case Examples of Small-Business Valuation 69

Chapter 11 Professional-Practice Valuation 71

Chapter 12 Small Manufacturer Valuation (With Ratio Studies) 87

Chapter 13 Valuation of a Restaurant 107

Chapter 14 Seventy Cents on the Dollar 124

Chapter 15 Retail Home-Decorating Business Valuation (With Production and Retail Sales) 137

Chapter 16 Retail Hardware Stores 158

Chapter 17 Retail Garden Center 170

Chapter 18 Grocery Store 188

Chapter 19 Manufacturer with Mail-Order Sales 204

Chapter 20 Wholesale Distributor 220

Chapter 21 A Practice Session: A Marina Valuation 236

Chapter 22 Concluding Thoughts about Value and Price 250

Chapter 23 “Dot-Com”—Information Technology 256

Appendix A Valuation of a Marina: Author’s Responses 274

Appendix B Yegge’s Rules for Making Deals Work 289

About the Author 291

Index 293

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