Category Archives: Financial Planning

Be Careful When Using EBITDA for the Terminal Valuation Calculation

If you’re going to construct consistent valuations, use earnings instead of cash flows in your calculations. Why is it important to be consistent? Because you have to calculate a discount rate based on one or the other. Richard Claywell explains. I was recently asked to review a report prepared by another expert. The other expert…  Continue Reading »

Goodwill in an Aquisition

Summary: Richard Claywell was recently asked to review a business valuation report when a company was sold for $91 million. The appraisal report shows sales of $116 million, profit margin of $28 million, an “approximate” multiple of 3.25 and a value of $91 million. The appraiser assigned 80% of the sales price to personal goodwill.…  Continue Reading »

Preparing a Discounted Cashflow

Summary: Valuators commonly need to perform a valuation using a “stub year,” or a date other than the company’s year end. This requires forecasting projected future company operations. It’s critical when performing this forecast that valuators not project historical data forward, and instead perform a new assessment for the new year. Here’s why. Included is…  Continue Reading »

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