Chris Mercer

NOVEMBER 15, 2022

I have heard many appraisers suggest that one should not normalize owner compensation when valuing minority interests “because the minority shareholder cannot change compensation.” Travis Harms and I cover the topic of normalizing adjustments in our book, Business Valuation: An Integrated Theory Third Edition , on pages 117-123.

Business Valuation 52

Business Valuation Normalized Earnings EBITDA Appraisal 52

Chris Mercer

JULY 15, 2022

Business appraisers routinely use the discounted cash flow model to value entire businesses. The value of all remaining cash flows after the finite forecast period is captured in the terminal value, which is, effectively, a capitalization of earnings or cash flows at the end of the forecast period.

Discounted Cash Flow 52

Discounted Cash Flow Terminal Value Dividends Appraisal 52

Equilest

NOVEMBER 25, 2023

Understanding the Concept: In essence, FCFF encapsulates the cash that can be distributed to both debt and equity holders after meeting operational needs and capital expenditures. The resulting value represents the cash available to all contributors of capital—both debt and equity. What is Free Cash Flow to Equity?

Discounted Cash Flow 52

Discounted Cash Flow Dividends Enterprise Value Terminal Value 52

Equilest

AUGUST 6, 2023

Whether you are an investor, a business owner, or a finance professional, the ability to accurately assess the worth of a company is crucial for making informed decisions. Understanding the company's financial health is fundamental to valuation.

Discounted Cash Flow 40

Discounted Cash Flow Business Valuation Precedent Transaction Analysis Comparable Company Analysis 40

Chris Mercer

MARCH 7, 2024

Procedural Guidelines (PG) are designed to provide more detailed guidance for consideration by business appraisers than found in the base standards themselves. Items on the list may or may not be applicable in specific valuation situations. The value of the underlying enterprise or asset, if applicable.

Dividends 52

Dividends Appraisal Terminal Value Marketability 52

Chris Mercer

MARCH 29, 2024

Exhibit 8.21 (Mercer-Harms Business Valuation: An Integrated Theory Third Edition ) (“IT3”) illustrates how pre-IPO discounts are calculated. This study is introduced with the following: Defend your discounts for lack of marketability with the most current data in the Valuation Advisors Lack of Marketability Discount Study.

Marketability 52

Marketability Appraisal Business Valuation Dividends 52

Chris Mercer

MARCH 8, 2023

” We look at this “discount” from the vantage points of the definition of fair market value, the integrated theory of business valuation, and recurring and incorrect rationales for the discount. This post is the first in a series of posts in which we will discuss fair market value in more detail.

Fair Market Value 52

Fair Market Value Marketability Appraisal Business Valuation 52