This course is designed to be an introductory course on the income approach used in business valuations and business calculations. Participants will be exposed to various income approach valuation methodologies. We will discuss why the income approach is used, and when it is appropriate. We will also discuss the importance of maintaining professional standards so that the valuation opinion can be presented in a court of law. We will review the NACVA and AICPA standards.
Note: This course is designed to be a prerequisite for intermediate and advanced business valuation courses to be offered in 2022.
Publication Date: April 2022
Designed For
This course is appropriate for anyone who is interested in business valuations.
Topics Covered
- Introduction to market approach used in business valuations and business calculations
- Various market approach valuation methodologies
- Why the market approach is used, and when it is appropriate
- Discuss the importance of maintaining professional standards so that the valuation opinion can be presented in a court of law
- Review the NACVA and AICPA standards
- Business Sales vs Asset Sales
- Valuing a business
- Valuation engagements
- Small business financials
- Planning the engagement
- Standards of value
- Premise of value
- Income approach
- Income approach for business
- Income approach pros
- Income approach cons
- Present value
- Weighted Average Cost of Capital (WACC)
- Discounted Cash Flow (DCF) formula
- Terminal value
- Cost of capital
- Capitalization of earnings benefit stream
- Multi stage growth
- Discounted cash flow formula
- Summary discounted cash flow
- Capitalization of excess earnings
- Levels of value
- Premiums and discounts
- Current issues
- Conclusion of value
- Business valuation report
Learning Objectives
- Identify the reasons for performing a valuation engagement using income approach
- Identify basic income approach methodologies
- Identify the methodology that would be applied if more than 50% of the business was being valued
- Identify what is not considered a company specific risk
- Identify what is not a pro for using the income approach
- Identify the financial that is considered to fall under GAAP
- Identify what would normally be completed first using the summary discounted cash flow method
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Auditing (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructor
Robert K Minniti
DBA, CPA, CFE, Cr.FA, CVA, MAFF, CFF, CGMA, PI
Dr. Minniti is the President and Owner of Minniti CPA, LLC. Dr. Minniti is a Certified Public Accountant, Certified Forensic Accountant, Certified Fraud Examiner, Certified Valuation Analyst, Certified in Financial Forensics, Master Analyst in Financial Forensics, Chartered Global Management Accountant, and is a licensed private investigator in the state of Arizona.
Dr. Minniti received his doctoral degree in business administration from Walden University, received his MBA degree and Graduate Certificate in Accounting from DeVry University’s Keller Graduate School of Management, and received his Bachelor of Science in Business Administration degree from the University of Phoenix. Dr. Minniti taught graduate and undergraduate courses in forensic accounting at DeVry University, Grand Canyon University, Kaplan University, Northwestern University, and the University of Phoenix. He designed graduate and undergraduate courses for Grand Canyon University, Northwestern University, and Anthem College.
He is a writer and public speaker. He has experience in forensic accounting, fraud examinations, financial audits, internal audits, compliance audits, real estate valuations, business valuations, internal control development, business continuation planning, risk management, cyber security, privacy laws, data security, Sarbanes-Oxley compliance work and business consulting. In addition to his practice Dr. Minniti is an instructor teaching continuing professional education classes for a variety of providers and CPA Societies.
Dr. Minniti is currently serving as a board member on the National Association of Certified Valuators and Analysts' (NACVA) Litigation Forensics Board (LFB) and as a committee member on the Arizona State Board of Accountancy's Law Review Advisory Committee.