"Rule of Thumb" Business Valuation
Tag Archives: Business Valuation Appraisal Rule Of Thumb
Estimating the value of a business based on appraisal rules of thumb and guidelines using a multiple of cash flow or a percentage of revenue.
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Steady Growth Business Valuation Rule Of Thumb
For a company that is growing at a steady-state rate, 10x EBITDA (earnings before interest, taxes, depreciation, and amortization, see rule of thumb: Cash Flow). This is essentially providing you with a proxy for a financial valuation theory known as the Dividend Growth Model. This theory states the value of a company is given by dividing its annual cash flow by the appropriate discount rate less the company s growth rate. Therefore, the 10x EBITDA rule of thumb comes from dividing the current years estimated cash flow by a 10% (net of growth) discount rate.
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Iowa Rejects Rule Of Thumb Business Valuation In Divorce
by bvertz on February 11, 2011
A recent decision of the Iowa Court of Appeals illustrates the perils of reliance upon industry rules of thumb to value a business in matrimonial litigation. In Marriage of Hagar (11/24/2010), husband and wife purchased a dry cleaning business from a trust established by husband’s parents as part of a business succession plan. Husband and wife agreed to a $300,000 purchase price that was determined by the companies’ accountant. The trust took a promissory note for the purchase price. The opinion does not describe the technique by which the accountant estimated the company’s value, but there were adjustments to normalize the excess rent and excess interest paid by the dry cleaning business to the real estate company (which the parents’ trust continued to own).
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Business Valuation Rule Of Thumb
All about business valuation rule of thumb personal training including multimedia press releases, product & service press news, company news, trade shows, company info, and jobs. Free-Press-Release.com also provides press news related to business valuation rule of thumb personal training, business valuation rule of thumb personal training as Be A Fit Mama, Inc. to hold free personal training sessions every first Saturday.
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Posted by Charles Brown