Author - Jean-Claude Desnoyers

Planning a business transfer

Are you planning to transfer your business? You are planning to retire in the next two to five years and would like to make a smooth transition. It’s a great idea to plan. The transfer of a business has several aspects to consider in addition to the financial one. How to properly plan the transfer of a business? What aspects should be considered? I can tell you more about this by presenting some important avenues that sometimes seem to [...]

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Plan to sell your business with a Chartered business valuator

You owned a business for several years? Have you started thinking about retirement? If so, are you among the 52% of entrepreneurs who do not have a retirement plan? You must rectify this situation. Your business was first a dream that you cultivated to make it what it is today. It is very important that your business continues to be successful even after you leave. In addition, it is imperative that you receive the right amount at the time [...]

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The 7 basic principles of business valuation: Principle 4

Principle N° 4 : The higher the underlying net tangible asset value of a business, the higher should be the going concern value of that business. The fourth basic principle of business valuation tells us that the higher the company’s tangible net worth, the higher the operating value. Let’s start by defining what the net tangible value of a business is in terms of operating value. It is the value determined using the tangible asset backing calculation. In the financial statements, assets [...]

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The 7 basic principles of business valuation : Principle 3

Principle #3:  While market rates of return are constantly in a state of flux, they provide important benchmark indicators at any given point in time, and over the long term influence rates of return sought by individual corporate acquirers. When establishing the value of a business using an income-based technique, the value of the business will depend, among other things, on the rate of return that will be assigned to it by the appraiser. To simplify the calculation, one divided [...]

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The 7 basic principles of business valuation: Principle 2

Principle º2: Value principally varies directly with the ability of a business to generate prospective discretionary cash flow, except in unusual circumstances where net asset liquidation results in a higher value. The value of a business depends on its future profitability (cash flow) and not on its past profitability. For example, a business that has been very profitable in the past who has now a major competitor which forces it to revise its prices downwards. This will inevitably have a [...]

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The 7 basic principles of business valuation

Principle # 1 : The value is determined at a specific point in time. It is a function of facts know and expectations made only at that point in time The first principle in business valuation suggests that “value is a function of time.” [1] To determine the fair market value (FMV) of a business, a chartered business valuator (CBV) must assign great importance to the valuation date. The valuation is based on the financial structure and future perspective of the [...]

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7 basic principles of business valuation

As a Chartered Business Valuator (CBV), I am called upon to perform several types of mandates. I work with different size of businesses that operate in several industries. I notice, however, that business valuation is a little-known area. As an expert, I believe it is important that my clients and future clients learn more about the service I offer them. As a result, over the next few weeks, I would like to give you some information about business valuations. For [...]

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Chartered business valuator: The CICBV

It is not enough to proclaim yourself a business valuator to be one. In fact, there’s an expertise and a professional designation of Chartered Business Valuator (CBV). This title is a result of several hundred hours of training and years of practice. The Chartered Business Valuator designation is given by The Canadian Institute of Chartered Business Valuators (CICBV). What is the CICBV? What are the standards of the profession? Is there a code of ethics to follow when you’re [...]

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The rules of thumb in business valuation and their limits

The rules of thumb in business valuation: what are they? Rules of thumb in business valuation are occasionally used to get a general idea of a business value without considering the particular situation of the business being appraised. Therefore, they are only approximate generalizations, which could be used for discussion purposes only and not to make decisions or transactions.  An example of a rule of thumb may be to determine a business’ value based on a percentage of sales.  [...]

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How to make your own judgments on the quality of a business valuation report?

In litigation files in which I am involved, I am often called upon to review and give my opinion on the quality of the business valuation report. As an expert, I look at the report in detail. I understand that it is difficult, for a non-expert, to judge a report’s quality just by taking a look at it. On the other hand, there are some elements that can be looked at to get an initial opinion on the quality [...]

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