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References
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Terminology
BUSINESS ENTERPRISE VALUE (BEV)
"A term applied to the concept of value contribution of the total intangible assets of a continuing business enterprise such as marketing and management skill, an assembled work force, working capital, trade names, franchises, patents, trademarks, contracts, leases, and operating agreements." (The Dictionary of Real Estate Appraisal, 4th ed., Appraisal Institute)
GOING-CONCERN VALUE
"An operating business enterprise that is expected to continue." (The Dictionary of Real Estate Appraisal, 4th ed., Appraisal Institute)
GOODWILL
"An intangible, salable asset arising from the reputation of a business; the expectation of continued public patronage; including other intangible assets like trade name and going concern value...," (The Language of Real Estate, 5th ed., John W. Reilly)
Valuing the Intangible
The Three Valuation Approaches (Quantive, Sep. 10, 2023)
“The three widely used valuation methods used in business valuation include the Asset Approach, the Market Approach, and the Income Approach.
The three approaches vary in the way they conclude to value, but the goal of each approach is still the same: to assess the value of the operating entity (i.e., the business).”
Nine Valuation Mistakes for Business Owners to Avoid (CPA Journal, Jan./Feb. 2022) E
“Whether or not a business owner plans to sell or transfer their business in the next few years, obtaining a proper business valuation is critical. According to a 2018 report by the Exit Planning Institute, many business owners "lack of readiness prevents them from harvesting the value of their business." Failing to Value an Ongoing Business Even if an owner is not contemplating the imminent sale or transfer of business, a professional valuation of the business as a going concern is essential.”
What Is a Business Valuation and How Do You Calculate It? (U. S. Chamber of Commerce, Sep. 7, 2021)
Learn the basics of business valuations, the differences between common valuation methods, and steps to calculate a rough value estimate.
Damodaran Says COVID-19 Crisis Puts More Emphasis on the Story Behind a Valuation (Business Valuation Update, Aug. 2021) E
“With such a disruptor as COVID-19, what happened to the subject company becomes more key in the overall valuation report. Where was this company before the crisis? What happened to it when the crisis hit? How did it respond? Did it rise to the challenge and retool to deal with the crisis?”
How to Value a Company by Analyzing Its Customers (Harvard Business Review, Jan./Feb. 2020) E“Customer-based company valuation, or CBCV, is a method that uses customer metrics to assess a firm’s underlying value…This article details how managers and investors can utilize models of customer acquisition, attrition, and spending to gain new insights into the value of a firm.”
Hotels & Motels
How to Value a Hotel: A Comprehensive Guide (Hotel Chantelle, Oct. 3, 2023)
“The value of a hotel is determined by analyzing metrics like average daily rate (ADR), revenue per available room (RevPAR), net operating income (NOI), cap rate, occupancy percentage, and the local real estate market.”
A Practical Guide to Hotel Appraisals (Cayuga Hospitality Consultants, Dec. 9, 2021)
Investors and hotel operators should have a working knowledge of hotel valuation basics. These include an understanding of regional economic data, locational influences, environment, supply and demand, and the concept of highest and best use.
What’s Driving Hotel Valuation as Recovery Continues (Hotel Management, Oct. 1, 2021)
With travel beginning to pick up, the changing economic landscape for hotels affects valuation considerations. The cost of debt, construction pipeline, and hotel product all stand out as particularly relevant factors during this time.
Retail Establishments
How to Sell and Value a Retail Business (Raincatcher, May 2023)
Learn about factors that make a retail business valuable, formulas for calculating value, tips for reducing risk, and how to prepare for selling the business.
Here’s How to Value a Retail Business (William Bruce, Jul. 5, 2022)
Informal methods for approximating the value of a retail business involve calculations based on discretionary earnings and annual gross revenue. While no substitute for a formal appraisal, these methods can be helpful for business owners who want a quick average.
Determine Your Retail Business Valuation with these 4 Simple Steps (440 Industries, Sep. 6, 2021)
Examines the reasons for conducting a valuation, business information needed, types of valuation methods, and how to select the right approach for your retail business.
Valuation Multiples for a Clothing Store (Peak Business Valuation, May 20, 2021)
Valuing a clothing store takes several complex factors into account. Learn the details of clothing store valuation multiples and how to calculate them.
Agencies, Small Firms, and Franchises
Franchise Business Valuation Multiples (Raincatcher, Aug. 2023)
“Valuation multiples play a pivotal role in gauging the worth of a franchise business. They provide valuable insights into your company’s financial standing and operational efficiency by benchmarking it against similar enterprises in the franchise market.”
When is a Business Valuation Needed for SBA Loans? (Eqvista, Jul. 10, 2022)
“SBA loans are an excellent source of funding for small businesses. All stakeholders must understand when an independent business valuation is required, who is competent to generate them, and the particular parameters that valuation analysts must follow when doing so.”
A Seller’s Guide to Small Business Valuation (Beacon, Dec. 2, 2021)
“There are three common methods to small business valuation: Income-based, Asset-based, and Market-based. Each of these methods takes a different approach to valuation, whether it is based on the cash flows that a business generates, the assets on its balance sheet, or the purchase price of companies in the same industry. It’s important to remember that there is no “correct” method, as each method has its advantages and drawbacks.”
Franchise Valuation: What Is Your Franchise Worth? (Under30CEO, Apr. 5, 2021)
While there are some similarities between valuing a franchise and valuing an independent business, franchises also have some unique considerations. Understand more about physical assets, available revenue, location, renewal rights, and recent sales.
Special Purpose Properties
Tips to Appraise, Buy, and Sell Special Purpose Property in 2023 (The Robert Weiler Company, Jan. 29, 2023)
Provides a brief look at the unique challenges associated with special purpose property valuations and transactions. Includes definitions and examples of special purpose properties.
Industry Information Resources – Industry-Specific Resource Guides for Over 400 Industries (ValuationResources.com, Jan. 30, 2023)
“The resource guides listed below provide sources for industry information, research, and analysis for more than 400 industries. Individual guides for each of these industries identify resources available from trade associations, research firms, and other sources, with resource categories referenced in these guides including industry analysis, statistics, trends, and forecasts, financial statements and financial ratios, and compensation and salary surveys.”
Valuing Marijuana Businesses (Marijuana Venture Magazine, Jan. 2022) E
In the final chapter of this four-part series, we will pull together what has been covered in the first three installments and look more closely at how to engage a qualified valuation professional, what to expect from their work and where to find industry data. Business and intellectual property appraisers can do in-depth analyses and produce detailed, full-scope reports or they can undertake more limited scope procedures resulting in valuation calculations that can be useful where an initial, tentative estimate of value is helpful and appropriate. Business disputes over ownership rights drive many appraisal assignments in our shop, as do divorce proceedings where a spouse has an interest in a cannabis business that is part of a marital estate.
Farm Valuation Issues (Agricultural Law and Taxation Blog, Aug. 14, 2021)
Examines special considerations of valuing a farm business. Also emphasizes the importance of accurately measuring unique assets such as tillable acres, livestock, and crops.
eBooks & Other Resources
eBooks.realtor.org
The following eBooks and digital audiobooks are available to NAR members:
Business Valuation: An Integrated Theory (eBook)
Business Valuation and Taxes: Procedure, Law and Perspective (eBook)
Business Valuation for Dummies (eBook)
The Market Approach to Valuing Businesses (eBook)
Real Estate Market Valuation and Analysis (eBook)
Books, Videos, Research Reports & More
As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.
The Valuation of Office Properties: A Contemporary Perspective (Appraisal Institute, 2009) HD1393.58.U6 S55
Business Valuation Bluebook: How Successful Entrepreneurs Price, Buy, Sell and Trade Businesses (Facts on Demand Press, 2005).HD 1387 Si4
Business Valuation Discounts and Premiums (John Wiley & Sons, Inc., 2001) HD 1387 P88bv
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