{"product_id":"the-market-approach-to-valuing-businesses-hardback-9780471696544","title":"The Market Approach to Valuing Businesses (Hardback) 9780471696544","description":"\u003cfont face=\"Georgia\"\u003e\r\n\u003cp\u003e\u003cfont size=\"6\"\u003eThe Market Approach to Valuing Businesses\u003c\/font\u003e\u003cbr\u003e\r\n\r\n\r\n\r\n\r\n\r\n\u003c\/p\u003e\n\u003cp\u003e\u003cfont size=\"4\"\u003eShannon P. Pratt (Author)\u003c\/font\u003e\u003c\/p\u003e\r\n\r\n\u003cp\u003e\u003cfont size=\"3\"\u003e9780471696544, Wiley\u003c\/font\u003e\u003c\/p\u003e\r\n\r\n\u003cp\u003e\u003cfont size=\"3\"\u003eHardback, published 16 December 2005\u003c\/font\u003e\u003c\/p\u003e\r\n\r\n\u003cp\u003e\u003cfont size=\"3\"\u003e432 pages\u003cbr\u003e23.7 x 16.2 x 3.5 cm, 0.821 kg\u003c\/font\u003e\u003c\/p\u003e\r\n\r\n\r\n\r\n\r\n\r\n\u003cp align=\"justify\"\u003e\u003cstrong\u003e\u003cfont size=\"3\"\u003e\u003cb\u003eYour Best Approach to Determining Value\u003c\/b\u003e  \u003cp\u003eIf you're buying, selling, or valuing a business, how can you determine its true value? By basing it on present market conditions and sales of similar businesses. The market approach is the premier way to determine the value of a business or partnership. With convincing evidence of value for both buyers and sellers, it can end stalemates and get deals closed. Acclaimed for its empirical basis and objectivity, this approach is the model most favored by the IRS and the United States Tax Court-as long as it's properly implemented.\u003c\/p\u003e \u003cp\u003eShannon Pratt's \u003cb\u003e\u003ci\u003eThe Market Approach to Valuing Businesses\u003c\/i\u003e\u003c\/b\u003e, Second Edition provides a wealth of proven guidelines and resources for effective market approach implementation. You'll find information on valuing and its applications, case studies on small and midsize businesses, and a detailed analysis of the latest market approach developments, as well as:\u003c\/p\u003e \u003cul\u003e \u003cli\u003eA critique of US acquisitions over the last twenty-five years\u003c\/li\u003e \u003cli\u003eAn analysis of the effect of size on value\u003c\/li\u003e \u003cli\u003eCommon errors in applying the market approach\u003c\/li\u003e \u003cli\u003eCourt reactions to the market approach and information to help you avoid being blindsided by a litigation opponent\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eMust reading for anyone who owns or holds a partial interest in a small or large business or a professional practice, as well as for CPAs consulting on valuations, appraisers, corporate development officers, intermediaries, and venture capitalists, \u003cb\u003e\u003ci\u003eThe Market Approach to Valuing Businesses\u003c\/i\u003e\u003c\/b\u003e will show you how to successfully reach a fair agreement-one that will satisfy both buyers and sellers and stand up to scrutiny by courts and the IRS.\u003c\/p\u003e\u003c\/font\u003e\u003c\/strong\u003e\u003c\/p\u003e\r\n\r\n\u003cp\u003e\u003cfont size=\"3\"\u003e\u003cp\u003eList of Exhibits xv\u003c\/p\u003e \u003cp\u003eForeword xix\u003c\/p\u003e \u003cp\u003ePreface xxi\u003c\/p\u003e \u003cp\u003eAcknowledgments xxv\u003c\/p\u003e \u003cp\u003eNotation System Used in This Book xxvii\u003c\/p\u003e \u003cp\u003eIntroduction xxxi\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart I. Defining Market Multiples and Market Approach Methods 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e1. Defining Market Value Multiples 3\u003c\/p\u003e \u003cp\u003eCommon Equity Only versus Total Invested Capital Multiples 5\u003c\/p\u003e \u003cp\u003eComputing Market Value of Equity Multiples 9\u003c\/p\u003e \u003cp\u003eCommonly Used Market Value of Equity Multiples 10\u003c\/p\u003e \u003cp\u003eComputing Market Value of Invested Capital (MVIC) Multiples 15\u003c\/p\u003e \u003cp\u003eCommonly Used MVIC Multiples 17\u003c\/p\u003e \u003cp\u003eTime Periods to Measure Financial Variables 22\u003c\/p\u003e \u003cp\u003eRelationship between Market Multiples and Capitalization Rates 23\u003c\/p\u003e \u003cp\u003eSummary 23\u003c\/p\u003e \u003cp\u003e2. The Guideline Public Company Method 25\u003c\/p\u003e \u003cp\u003eScope of Market 26\u003c\/p\u003e \u003cp\u003eAvailability of Public Company Data 26\u003c\/p\u003e \u003cp\u003eAnalytical Data for Public Companies 29\u003c\/p\u003e \u003cp\u003eThe Guideline Public Company Basic Procedure 31\u003c\/p\u003e \u003cp\u003ePremiums and Discounts 33\u003c\/p\u003e \u003cp\u003eSummary 34\u003c\/p\u003e \u003cp\u003e3. The Guideline Transaction (Merged and Acquired Company) 35\u003c\/p\u003e \u003cp\u003eMethod\u003c\/p\u003e \u003cp\u003eDifferences in Transaction Structure 36\u003c\/p\u003e \u003cp\u003eScope of Market 38\u003c\/p\u003e \u003cp\u003eAvailability of Merged and Acquired Company Transaction Data 38\u003c\/p\u003e \u003cp\u003eHow Far Back in Time Are Transactions Relevant? 40\u003c\/p\u003e \u003cp\u003eThe Guideline Merger and Acquisition Basic Procedure 41\u003c\/p\u003e \u003cp\u003ePremiums and Discounts 41\u003c\/p\u003e \u003cp\u003eSummary 42\u003c\/p\u003e \u003cp\u003eix\u003c\/p\u003e \u003cp\u003e4. Other Market Methods 44\u003c\/p\u003e \u003cp\u003ePast Transactions 44\u003c\/p\u003e \u003cp\u003eOffers to Buy 46\u003c\/p\u003e \u003cp\u003eRules of Thumb 46\u003c\/p\u003e \u003cp\u003eBuy-Sell Agreements 48\u003c\/p\u003e \u003cp\u003eSummary 49\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart II. Finding and Analyzing Comparative Market Transaction Data 51\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e5. Finding Public Company Market Transaction Data 53\u003c\/p\u003e \u003cp\u003eEdgar 54\u003c\/p\u003e \u003cp\u003eSecondary Sources for SEC Reporting Companies 54\u003c\/p\u003e \u003cp\u003ePublicly Registered Limited Partnership Data 55\u003c\/p\u003e \u003cp\u003eSources for Nonreporting Companies 55\u003c\/p\u003e \u003cp\u003eSummary 56\u003c\/p\u003e \u003cp\u003e6. Finding Merger and Acquisition Market Data 57\u003c\/p\u003e \u003cp\u003eLarge Transactions 58\u003c\/p\u003e \u003cp\u003eMiddle Market and Small Transactions 63\u003c\/p\u003e \u003cp\u003eVery Small Transactions 69\u003c\/p\u003e \u003cp\u003eSummary 74\u003c\/p\u003e \u003cp\u003e7. Adjusting Financial Statements 76\u003c\/p\u003e \u003cp\u003eChoosing the Time Periods for Comparative Statements 77\u003c\/p\u003e \u003cp\u003eObjectives of Financial Statement Adjustments 78\u003c\/p\u003e \u003cp\u003eAdjustments for Nonoperating or Excess Assets 79\u003c\/p\u003e \u003cp\u003eNonrecurring Items 81\u003c\/p\u003e \u003cp\u003eAdjustments for Accounting Comparability 83\u003c\/p\u003e \u003cp\u003eAdjustments for “Insider” Anomalies 84\u003c\/p\u003e \u003cp\u003eAdjustments for Income Taxes in Pass-through Entities 85\u003c\/p\u003e \u003cp\u003eand S Corporations Summary 85\u003c\/p\u003e \u003cp\u003e8. Comparative Financial Analysis 87\u003c\/p\u003e \u003cp\u003eTypes of Comparative Financial Analysis 88\u003c\/p\u003e \u003cp\u003eSources of Comparative Financial Analysis 89\u003c\/p\u003e \u003cp\u003eTypes of Ratios 101\u003c\/p\u003e \u003cp\u003eSummary 117\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart III. Compiling Market Value Tables and Reaching a Value Conclusion 121\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e9. Compiling Useful Market Value Tables 123\u003c\/p\u003e \u003cp\u003eTwo Distinct Alternatives in Market Multiples 124\u003c\/p\u003e \u003cp\u003eExamples of Market Value Tables 125\u003c\/p\u003e \u003cp\u003eSummary 133\u003c\/p\u003e \u003cp\u003e10. Selecting, Weighting, and Adjusting Market Value Multiples 137\u003c\/p\u003e \u003cp\u003eSize and Nature of Company 137\u003c\/p\u003e \u003cp\u003eAvailability of Data 139\u003c\/p\u003e \u003cp\u003eDispersion of Market Value Multiples 139\u003c\/p\u003e \u003cp\u003eThe Harmonic Mean as a Measure of Central Tendency 139\u003c\/p\u003e \u003cp\u003eAdjusting from Observed Market Value Multiples 140\u003c\/p\u003e \u003cp\u003eIllustrative Estimate of Value Using Mathematical Weighting 141\u003c\/p\u003e \u003cp\u003eSummary 142\u003c\/p\u003e \u003cp\u003e11. Control Premiums and Minority Discounts 143\u003c\/p\u003e \u003cp\u003ePrerogatives of Control Ownership 144\u003c\/p\u003e \u003cp\u003eQuantifying Control Premiums and Minority Discounts 145\u003c\/p\u003e \u003cp\u003eHow the Standard of Value Affects Control Premiums and\/or Minority Discounts 148\u003c\/p\u003e \u003cp\u003eThe Control versus Minority Issue Covers a Spectrum 150\u003c\/p\u003e \u003cp\u003eSummary 151\u003c\/p\u003e \u003cp\u003e12. Discounts for Lack of Marketability 153\u003c\/p\u003e \u003cp\u003eDefining Discount for Lack of Marketability 153\u003c\/p\u003e \u003cp\u003eApplying the Discount for Lack of Marketability 154\u003c\/p\u003e \u003cp\u003eMarket Evidence Regarding the Discount for Lack of Marketability for Minority Interests 155\u003c\/p\u003e \u003cp\u003eRegulatory and Court Acceptance of Empirical Lack of Marketability Studies 158\u003c\/p\u003e \u003cp\u003eFactors Affecting Magnitudes of Marketability Discounts 162\u003c\/p\u003e \u003cp\u003eDiscounts for Lack of Marketability for Controlling Interests 163\u003c\/p\u003e \u003cp\u003eSummary 163\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart IV. Sample Market Approach Cases 167\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e13. Small-size Service Company Sample Case: Sub Shop 169\u003c\/p\u003e \u003cp\u003eBusiness Description 169\u003c\/p\u003e \u003cp\u003eValuation Assignment 170\u003c\/p\u003e \u003cp\u003eEconomic Outlook 170\u003c\/p\u003e \u003cp\u003eFinancial Statement Analysis 170\u003c\/p\u003e \u003cp\u003eIdentification and Selection of Market Data 177\u003c\/p\u003e \u003cp\u003eIdentification and Selection of Valuation Multiples 188\u003c\/p\u003e \u003cp\u003eValuation of Wildcat Subs 190\u003c\/p\u003e \u003cp\u003eReconciling Value Conclusions 194\u003c\/p\u003e \u003cp\u003eAddendum if Valuing for Other Purposes 194\u003c\/p\u003e \u003cp\u003e14. Medium-size Service Company Sample Case— Software Developer 195\u003c\/p\u003e \u003cp\u003eValuation Assignment 196\u003c\/p\u003e \u003cp\u003eEconomic Outlook 197\u003c\/p\u003e \u003cp\u003eFundamental Position of the Company 198\u003c\/p\u003e \u003cp\u003eSelection of Market Data 200\u003c\/p\u003e \u003cp\u003eFinancial Statement Analysis 203\u003c\/p\u003e \u003cp\u003eIdentification and Application of Valuation Multiples 221\u003c\/p\u003e \u003cp\u003eValuation of Colossal Software 232\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart V. Important Aspects of Using the Market Approach 239\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e15. Reconciling Market Approach Values with Income and Asset Approach Values 241\u003c\/p\u003e \u003cp\u003eDid We Appraise the Correct Property? 241\u003c\/p\u003e \u003cp\u003eConformance to the Required Definition of Value 242\u003c\/p\u003e \u003cp\u003eRelative Adequacy and Reliability of Data 242\u003c\/p\u003e \u003cp\u003eCheck for Errors 243\u003c\/p\u003e \u003cp\u003eCheck Assumptions 243\u003c\/p\u003e \u003cp\u003eRelationship between Market Multiples and Discount or Capitalization Rates 243\u003c\/p\u003e \u003cp\u003eWhat to Do When Reconciliation Efforts Fail 247\u003c\/p\u003e \u003cp\u003eExplicit versus Implicit Weighting 249\u003c\/p\u003e \u003cp\u003eSummary 250\u003c\/p\u003e \u003cp\u003e16. Does Size Matter? Evidence from Empirical Data 252\u003c\/p\u003e \u003cp\u003eEvidence from Market Approach Data 252\u003c\/p\u003e \u003cp\u003eEvidence from Income Approach Data 255\u003c\/p\u003e \u003cp\u003eSummary 262\u003c\/p\u003e \u003cp\u003e17. Common Errors in Implementing the Market Approach 263\u003c\/p\u003e \u003cp\u003eInadequate Selection of Guideline Companies 264\u003c\/p\u003e \u003cp\u003eIndiscriminate Use of Average (or Median) Multiples 265\u003c\/p\u003e \u003cp\u003eFailing to Consider Guideline Company Financial Statement Adjustments 265\u003c\/p\u003e \u003cp\u003eFailure to Conduct a Site Visit and Management Interviews 266\u003c\/p\u003e \u003cp\u003eMaking Inappropriate or Unsupported Financial Statement Adjustments 267\u003c\/p\u003e \u003cp\u003eApplying Multiples to Inconsistently Defined Data 268\u003c\/p\u003e \u003cp\u003eFailure to Match Time Periods 268\u003c\/p\u003e \u003cp\u003eReliance on Rules of Thumb 269\u003c\/p\u003e \u003cp\u003eFailure to Account for Excess or Deficient Cash 270\u003c\/p\u003e \u003cp\u003eFailure to Adjust for Differences in Deal Terms and Structure 271\u003c\/p\u003e \u003cp\u003e“Assets Plus .” Rules 272\u003c\/p\u003e \u003cp\u003eFailing to Apply Appropriate Discounts and Premiums 272\u003c\/p\u003e \u003cp\u003eSummary 273\u003c\/p\u003e \u003cp\u003e18. The Dismal Track Record of U.S. Market Acquisitions 274\u003c\/p\u003e \u003cp\u003eAcquirers Tend to Overpay 274\u003c\/p\u003e \u003cp\u003eWhy Buyers Overpay: The Hubris Effect 276\u003c\/p\u003e \u003cp\u003eThe Frog-kissing Princess 278\u003c\/p\u003e \u003cp\u003eSummary 279\u003c\/p\u003e \u003cp\u003e19. The Market Approach in the Courts 280\u003c\/p\u003e \u003cp\u003eU.S. Tax Court 280\u003c\/p\u003e \u003cp\u003eMarital Dissolutions 286\u003c\/p\u003e \u003cp\u003eBankruptcy 287\u003c\/p\u003e \u003cp\u003eCondemnation 288\u003c\/p\u003e \u003cp\u003eDissenting Stockholder, Minority Oppression, and Other Shareholder Disputes 288\u003c\/p\u003e \u003cp\u003eSummary 292\u003c\/p\u003e \u003cp\u003eAppendixes 297\u003c\/p\u003e \u003cp\u003eAppendix A Bibliography 299\u003c\/p\u003e \u003cp\u003eAppendix B Data Resources 309\u003c\/p\u003e \u003cp\u003eAppendix c International Glossary of Business Valuation Terms 331\u003c\/p\u003e \u003cp\u003eAppendix d The Quantitative Marketability Discount Model 339\u003c\/p\u003e \u003cp\u003eAppendix E Pratt’s Stats™ Data Contributors 351\u003c\/p\u003e \u003cp\u003eIndex 377\u003c\/p\u003e\u003c\/font\u003e\u003c\/p\u003e\r\n\r\n\u003cp\u003e\u003cfont size=\"3\"\u003eSubject Areas: Finance \u0026amp; accounting [\u003ca title=\"See our other books on Finance \u0026amp; accounting\" href=\"https:\/\/freshlyprintedbooks.co.uk\/search?q=%22Finance%20\u0026amp;%20accounting%20%5BKF%5D%22\"\u003eKF\u003c\/a\u003e]\u003c\/font\u003e\u003c\/p\u003e\r\n\r\n\r\n\u003c\/font\u003e","brand":"Wiley","offers":[{"title":"Brand New","offer_id":52511409570072,"sku":"9780471696544","price":144.99,"currency_code":"GBP","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0730\/2037\/5320\/files\/9780471696544.jpg?v=1786599543","url":"https:\/\/freshlyprintedbooks.co.uk\/products\/the-market-approach-to-valuing-businesses-hardback-9780471696544","provider":"Freshly Printed Books","version":"1.0","type":"link"}