Beginning Business Valuation Barry Goodman CFA , ASA, CPA/ABV, CBA, CFP

1. Beginning Business Valuation Barry Goodman CFA, ASA, CPA/ABV, CBA, CFP Advanced Valuation Analytics, Ltd.

2. Capitalization Of Cash Flow Method • Estimate the capitalization rate. • Estimate the cash flow capacity. • Divide the cash flow capacity by the capitalization rate.

3. Capitalization Rate • Factor, expressed in %, used to convert anticipated benefits into a current value • Considers interest rates, rates of return expected by the market, and risk of the anticipated benefits

4. Cash Flow Capacity • The company’s ability to produce profit • Looks at historical profit – not anticipated future profit • Estimation Methods • Most recent year • Mean or weighted average • Another way to estimate cash flow capacity- • Projected Year

5. Gradual Increase

6. Erratic History

7. Hockey Stick

8. Sources of Market Data • Publicly-traded stocks • Iba data base • Pratt’s stats • Done deals • Zweig’s valuation survey • Other specialized sources

9. Company Results • Net income • EBITDA • Cash flow • Owner’s discretionary cash flow • Revenue

10. Discounts/Premiums