Posts Tagged ‘Business Valuation’
Contributed by: David Coffman
Business performance measurement and management promote the use of carefully selected key performance indicators to evaluate the performance of a company, its management and employees. Management theory has long recognized that the primary purpose of a company’s management is to maximize shareholder value. For large companies with stock that freely trades in public securities markets, this is a simple process of monitoring stock price. For small, private companies the situation is quite different.
Large, public companies have many stockholders that elect a board of directors, who in turn hire the key executives. This separation of ownership from management does not exist in small, private businesses. Often these three groups (owners, directors and management) are comprised of the exact same individuals. Small businesses become extensions of their owners in many ways including their objectives. Owners are typically more concerned about objectives like: minimizing taxes, maximizing personal income, maintaining personal lifestyles, minimizing the assets held within the business, and protecting personal assets. Pursuit of these objectives tends to minimize the value of small businesses. Owners often are not very interested in the value of their businesses until Continue Reading
Contibuted by: David Coffman
From where does the value of a business come? Like any investment, business value is a function of the returns a business generates and the risks associated with owning it. Continue Reading