Business Valuations: Market Approach

Author: Robert K Minniti

This course is designed to be an introductory course on the market approach used in business valuations and business calculations. Participants will be exposed to various market approach valuation methodologies. We will discuss why the market 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 2023.

Publication Date: March 2022

Designed For
This course is appropriate for anyone who is interested in business valuations.

Topics Covered

• Introduction to income approaches used in business valuations and business calculations
• Various income approach valuation methodologies
• Why the income approach is used, and when it is appropriate
• 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 engagemets
• Planning the engagement
• Standards of value
• Premise of value
• Market approach
• Market approach pros and cons
• Market approach for businesses
• Standard industry classification
• ISIC
• SIC versus NAICS
• NAICS
• Guideline Public Company Method
• Comparable Private Transaction Method
• Prior Sale Method
• 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 market approach
• Identify basic market approach methodologies
• Identify how best to do the valuation of an ownership interest in a public company
• Identify the engagement that would involve performing an analysis on a valuation report completed by another valuator
• Identify the discount that cannot be applied in a business valuation
• Identify what would be applied if more than 50% of the business was being valued
• Identify a premise of value

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Auditing (2 hours)

Program Prerequisites
None

Advance Preparation
None