Business Valuation

What is the business worth? Jones & Roth can answer that question.

​It is critical you have a sound, professional business appraisal by a certified appraiser whether you are selling or buying a business or an interest in a business, planning your estate, preparing the tax filing of an estate, settling a contract dispute, or involved in a divorce. Valuing a business requires a broad scope of technical and business experience. Judgment, analysis, and independence are key factors in the services we offer clients.

We apply sound appraisal techniques and a thorough understanding of corporate finance and today’s tax laws to provide a valuation tailored to your business and situation. We have experience in appraising interests in all business types (corporations, general and limited partnerships, LLCs, proprietorships, including real estate joint ventures/undivided fractional interests) in virtually all industries.

Our business valuation team is one of the most experienced teams in Oregon. Led by Bill Mason, ASA, CPA/ABV, CFF, our team has served as expert witnesses for our clients in US Tax Court, Federal District Court and state courts on valuation matters and have been appointed by courts to advise them on valuation matters.

CPA/ABV – Certified Public Accountants with an Accreditation in Business Valuation American Institute of Certified Public Accountants

ASA – Accredited Senior Appraisers in Business Valuation American Society of Appraisers

CFF – Certified in Financial Forensics  American Institute of Certified Public Accountants


Business Valuation News

Business Valuation Part 3: The Income Approach

Business Valuation Part 3: The Income Approach

This post is part of a 4-part series covering business valuation and providing guideline information on the process of valuing a business. To start at the beginning and learn what business valuation is and why a business valuation is needed, read Part 1: Levels of Value. For an in-depth look at the first valuation approach, read Part 2: The Asset Approach. Part 3: The Income Approach This income approach considers the expected periodic cash return that could be derived from an ownership interest in the equity of a company.  The periodic cash flow stream can be developed in two ways: based on a discrete cash flow period then capitalizing the cash flow of the final period to value the cash flows beyond the projected period or directly capitalizing a level of normalized cash flow. To apply this model, we determine cash flows available to the equity investor, or as debt free cash flow.  Cash flows available to equity investors are used if we wish to directly value equity, whereas debt free cash flows are used if we intend on valuing total invested capital or total enterprise value, because this is the cash pool from which interest and dividends or distributions could be paid to all invested capital holders.  Formulas to calculate free cash flow to equity holders and free cash flow to all invested capital holders are shown below:   Free Cash Flow to Equity Holders Net Income +   Depreciation & Amortization –    Capital Expenditures –    Increase in Working Capital +   Increase in Interest-Bearing Debt Free Cash Flow to Equity Holders   Free Cash Flow to Invested Capital Holders...
Business Valuation Part 2: Asset Approach

Business Valuation Part 2: Asset Approach

This post is part of a 4-part series covering business valuation and providing guideline information on the process of valuing a business. To start at the beginning and learn what business valuation is and why a business valuation is needed, read Part 1: Levels of Value. Part 2: The Asset Approach The asset approach is also referred to as the adjusted net asset approach or the net asset value approach. All these names generally mean the same thing. This method is most appropriate when valuing a holding company (an entity holding various investment assets such as real estate and/or securities) or when valuing a marginally profitable company.  Companies such as those are valued based on their underlying asset values. The asset values are adjusted to their fair market values and the sum of the adjusted asset values is reduced by outstanding liabilities to determine the net asset value (or equity value).  This is basically a modified liquidation value approach (true liquidation value would include liquidation expenses) and generally yields a floor value for a controlling interest. The following simplified example below illustrates the steps involved in using the asset approach. In this example, the company has assets with a book value of $500,000 and liabilities with a book value of $450,000. Typically, current assets (such as cash, accounts receivable and prepaid expenses) are assumed to be equal to their fair market value. It is also generally assumed that the book value of inventory is equal to its fair market value, however, this may not always be the case if there is stale or obsolete inventory still sitting on the books....
Business Valuation Part 1: Levels of Value

Business Valuation Part 1: Levels of Value

This is Part 1 of a four part series that will serve as a valuation primer. The purpose of Part 1 is to give an overview of common terms and methods used to value an equity interest in a company.

The issue we are trying to resolve when valuing a business is the price that two independent parties would pay for or be willing to receive for the interest they hold. The value of a business interest depends on the future benefits that will accrue to it.  The financial benefits from ownership must come from one of the following sources: distribution of earnings, from the sale of the interest, or distribution from the liquidation of assets.  In determining the value of a business interest, one should focus on the benefits the shareholder(s)/member(s) may receive from long-term ownership in the securities. In appraisal terminology, these three sources of return correspond to the income, market, and adjusted net asset value approaches, respectively.

What is a Business Valuation?

What is a Business Valuation?

A business valuation, or also sometimes referred to as a business appraisal, is a formal process to inform a business owner or a shareholder of the value of their interest in the company. A company can take many different forms and hold a variety of assets or perform a variety of services but a business valuation can use the information provided by a company to give an opinion of the value of that business.

Jason Bolt, CFA, ASA Joins Jones & Roth Business Valuation Team

Jason Bolt, CFA, ASA Joins Jones & Roth Business Valuation Team

Jones & Roth CPAs and Business Advisors are excited to announce that Jason Bolt, CFA, ASA has joined the Firm’s Business Valuation Team. Mr. Bolt holds expert knowledge in all areas of business valuation. His experience includes valuations of businesses in numerous industries (e.g. software, medical devices, convenience stores, forest products, manufacturing, professional services, retail/wholesale, agriculture, and restaurants). Mr. Bolt’s professional experience stems from his time providing valuation services since 2005 and his experience in corporate finance and his education at Cornell University where he studied corporate finance, investments, portfolio theory, and economics. His appraisal experience includes individual Client case management and all aspects of appraisal engagements including Client Company due diligence and valuation approaches and methodologies. His valuation experience includes appraisal engagements for a variety of purposes including M&A transactions, gift and estate tax, 409A valuation, and ESOP purposes. Mr. Bolt attends annual business valuation conferences which include annual Advanced Business Valuation Conferences offered by the American Society of Appraisers and Portland chapter meetings of the American Society of Appraisers. Mr. Bolt has qualified and testified as an expert witness in Oregon. Jason is active as a writer and presenter on business valuation education and thought leading...
Big Changes in Estate Taxes and Planning Opportunities

Big Changes in Estate Taxes and Planning Opportunities

Aren’t estate taxes and estate planning based on the “fair market” value of assets at the date of death or the date of the gift? You only thought so! Fair Market Value is defined as “…the price at which property would change hands between a willing buyer and a willing seller…

Confusion Between Income Approaches

Confusion Between Income Approaches

Capitalization of Earnings versus Discounted Cash Flow. Which calculation relies on greater speculation? Does the court need some education? Is your appraiser not properly incorporating available financial information, or has the appraiser not asked all the pertinent questions?…

Business Valuation Team


William V. Mason, ASA, CPA/ABV, CFF

William V. Mason, ASA, CPA/ABV, CFF

Managing Senior Financial Analyst

Bio

Jason Bolt, CFA/ASA

Jason Bolt, CFA/ASA

Business Valuation Manager