A seemingly salacious title to a blog post, but the Business Valuation industry originated from alcohol - or lack thereof.In 1920 with the enactment of prohibition many enterprises that were engaged in the alcoholic beverage business were allowed tax breaks by the U.S. Government for “damages” suffered.  In order to determine certain tax benefits to these businesses their “intangible value” or “goodwill” had to be determined.  Prior to this time it was commonly believed that the value in a business was essentially the value of its assets less its liabilities.But, as we know today, business value comes in many forms - although most notably in the cash and profits it generates, has generated, and will generate.  But goodwill is also imputed into a brand name, some special technology that may or may not have materialized into a market, and in a myriad of other ways.  Even a stable staff generates goodwill.As a direct result of prohibition the IRS published a document called the Appeals and Revenue Memorandum (or ARM) 34.  ARM 34 presented two novel ideas: 1) Goodwill exists if a business has earnings in excess of another “like business” and 2) Goodwill value is determined by calculating the “current value” of those excess earnings. These concepts formed the basis for the practice of business valuation today.  Additional questions, responses, and new sophisticated methods dealing with business valuation resulted.  Check us out over at Fair Market Valuations to find out more.Posted by: John Klearman, Fair Market Valuations

Most Americans continue to read, hear and see troubling news about the U.S. economic outlook.  Business owners need some reassurance that the sky is not falling, particularly for business owners considering the future sale of their business.  Today is a seller’s market!  But, cyclical indicators point that this window will not stay open forever.

Over at BNET, they are developing a series on the topic of M&A with goal of empowering business sellers and buyers to “Be a Master M&A Negotiator”.  We like BNET because they take complex issues and spell them out in layman’s terms making it easy for most to understand and learn.  The portal with various resources is here. 

The Internet has revolutionized the way we operate in life, work, and recreation.  Small companies can efficiently serve national or global customers real-time, meeting their needs and fulfilling their demands.  While this convenience is mostly positive in the eyes of a business owner, it can also come with some hefty negatives.  Case in point, online reputation.  A trend called “online reputation monitoring”, which began to get noticed back in 2005 is gaining steam as companies seek to manage their brand’s integrity and reputation amongst the thralls of blogs, message boards, forums and what’s known as “user generated content”.  So this begs to question, what is your reputation worth when you are planning on appraising and then selling your business?

If you have ever owned a business at any point in your career, you have most certainly asked the question, “what is my business worth?”.  Well, did you get an answer?  If so, was it legit or pie in the sky?  Did you make a guesstimate or did you CPA give a number?