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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)
"An operating business enterprise that is expected to continue." (The Dictionary of Real Estate Appraisal, 4th ed., Appraisal Institute)
"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
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?”
The Impact of COVID-19 on Business Valuations (NJCPA, Mar. 15, 2021)
The pandemic introduced new factors to consider in business valuations, including government mandates and laws such as the CARES Act and Consolidated Appropriations Act. It’s also important to consider multiple projections for the course of the pandemic and how each impacts a business.
How to Value A Company: An In-Depth Guide to The Business Valuation Process (CB Insights, Feb. 3, 2021)
A detailed look at business valuations, from methods for valuing pre- and post-revenue companies to identifying over- and undervalued businesses. Also covers the types of data needed for valuations and where to find them.
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
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.
Room Revenue Multiplier: A Quick Hotel Valuation Method (UpStay, May 12, 2021)
The room revenue multiplier method uses the income capitalization approach for hotel valuation. Learn more about the method, formulas, and how to calculate.
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.
Here’s How to Value a Retail Business (William Bruce, Apr. 4, 2020)
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.
Agencies, Small Firms, and Franchises
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.
SBA Business Valuation Guidelines in 2021 (Pinnacle Valuations, Feb. 20, 2021)
“There are many different factors to consider when a business needs to apply for an SBA loan; the Small Business Administration lays out all of its requirements in its current Standard Operating Procedures (SOP 50 10 6). The document explains the specific requirements that are necessary when a business wishes to qualify for a loan. Additionally, when the SBA loan includes a contemplated change of ownership, the SOP also explains in detail the many things that must be performed and presented, including when a business valuation is required for an SBA loan and the rules related to that business valuation.”
Special Purpose Properties
Tips to Appraise, Buy, and Sell Special Purpose Property in 2021 (The Robert Weiler Company, Jan. 26, 2022)
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. 10, 2022)
“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.”
Cannabis Business Valuations: FAQs and Why They Matter (Crowe, Aug. 30, 2021)
“With so much change in motion, cannabis business leaders should prepare now and familiarize themselves with when to seek a third-party valuation – whether they are a buyer or a seller in an M&A – and what to expect during the process. Exploring five frequently asked questions can help illuminate issues surrounding cannabis business valuations.”
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
The following eBooks and digital audiobooks are available to NAR members:
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)
The Small Business Valuation Book: Easy-to-use Techniques That Will Help You... Determine a Fair Price, Negotiate Terms, Minimize Taxes (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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