There are several accounting methods that will be encountered when recasting financial statements of small businesses, as well as variations on these methods. This article provides an introduction to the various methods. The subject’s entity type can also affect the accounting method used for tax returns. This article also discusses the impact of entity type […]
When listing a business the Seller usually provides the business broker with tax returns for prior years and an interim income statement for the current year. For small businesses such interim statements are often on a cash basis and are often prepared by management. Annualizing interim statements without reviewing the result for reasonableness may create […]
Unlike most comparables sold databases, Bizcomps does not include inventory in the selling price. This is actually a benefit if the subject has excess inventory. Since inventory is not included in the selling price the subject’s inventory must be added to the value indication obtained using Bizcomps. If the subject has excess inventory, this approach […]
Rent Adjustments for Businesses with Non-Arm’s Length Leases Valuing a Business with A Non-Arm’s Length Lease) If a business rents its facility from an independent third party (i.e., arms-length lease), it is typically not necessary to make any adjustments to rent. An exception can occur if the business has a binding long-term lease with below […]