Archive 2013-66: Does and Don’t in Valuation of Small Businesses




2013-66: Dos and Don’ts in the Valuation of Small Businesses and Professional Practices

**Webinar 66 Live Broadcast Date: October 17, 2013 **

presented by Stacey Udell, CPA/ABV/CFF, ASA, CVA Moderator with Lari Masten, MSA, CPA/ABV, CFF, CVA, ABAR and Mark Hanson, CPA/ABV, CVA

VPS StraightTalk Webinar Series: Dos and Don’ts in the Valuation of Small Businesses and Professional Practices Including Divorce Valuation Issues

Valuing small businesses and professional practices (less than $3 million in value) is often more difficult than valuing larger businesses and professional practices. You will learn the solutions to key issues that are unique to small businesses and professional practices including: practice and personal goodwill, key person, noncompete agreements, marketability, liquidity and transferability, divorce, compensation, pass-through entities, information challenges, and valuation approaches and methodologies.

Learning Objectives:

  • The participant will learn the key issues and solutions in valuing small businesses and professional practices (less than $3 million in value)
  • The participant will learn about key divorce issues
  • The participant will learn how to deal with personal goodwill (salable and unsalable) vs. enterprise goodwill vs. key person vs. noncompete agreements
  • The participant will learn about options when information is unavailable or withheld
  • The participant will learn how to supportably apply valuation methods
  • The participant will learn about dealing with normalization adjustments including non-market compensation issues
  • The participant will learn about tax affecting pass-through entities

Webinar Outline:

  • Efficiencies in valuing small businesses
    • Purpose of the valuation
    • The audience for the valuation
    • Reports and level of content
    • The use of shortcuts
    • Financial information and adjustments
  • Information and data challenges
    • Divorce issues
    • When is too little data and access too little for a valuation opinion?
    • Valuation vs. forensic services
  • Examples and techniques for separating personal/professional and enterprise/practice goodwill in divorce valuations
    • Quantitative methods
    • Qualitative methods, e.g., Multi-attribute Utility Model
    • Salable vs. unsalable goodwill
    • Noncompetes as proxies
    • Key person issues in small practices
    • Excess earnings problems
      • Is there any goodwill if there are no excess earnings
  • Valuation approaches and methods and levels of reliance
    • Guideline public company method – automatic rejection?
    • Guideline company transaction method and supporting databases
      • Data constraints and level of reliance – primary vs. corroborating
      • Statistical techniques, e.g., Direct Market Data Method
      • Rules of thumb
      • Buying-a-job values
    • Capitalized earnings/cash flow method
      • Rate of return inputs including equity vs. WACC
      • Specific company risk methods
        • Qualitative
        • Quantitative
          • Butler Pinkerton Total Cost of Equity
          • Risk weighting models, e.g., BuildUp Summation Model
      • Weighting of historical earnings
      • Long term growth rates
    • Normalization adjustments
      • Compensation
        • Sources and reliability of data
        • Are valuation analysts qualified to make these adjustments
      • Control vs. minority
      • Taxes
      • Depreciation
      • Working capital
      • Non-operating assets and perks
    • To DCF or not to DCF
    • Net asset approach – when does it apply or not apply?
  • Pass through entities/S Corps and taxation
    • Tax affecting and calculation of S Corp premiums
    • What to do in a state that does not allow tax affecting in divorce valuations
    • Relationship to personal balance sheet
  • Business valuation standards – do the Family Courts care?
    • Use and support of calculations and calculation reports
    • Bolster the credibility of your analysis and report
    • How attorneys are using them to discredit valuation analysts


  • VPS Webinar PowerPoint slides
  • Related articles
  • Following the webinar, attendees will receive a webinar transcript along with an interactive video of the webinar showing the audio synced to the slide
    presentation in real time


Information on CPE credits, refund policies, and complaint resolution can be found at

Included in this downloadable archived webinar package:

  • Audio/Video file
  • Webinar transcript
  • Original Webinar handouts

The archived webinar package is an Adobe Presenter PDF file that allows you to view the video of the webinar with the synced audio so that you see the presentation just as it was presented “live.” The Presenter format also allows for easy navigation through the webinar so you can quickly go to a specific section in the presentation. The handout materials are included in the file. To view the Webinar Presenter file, you must have Adobe Reader software version 9 or higher. You can download the free current version of Adobe Reader at

Additional information

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