Yannick Coulon - Small Business Valuation Methods: How to Evaluate Small, Privately-Owned Businesses

Cover illustration: Melisa Hasan

This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG

The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Valuation is the natural starting point toward buying or selling a business or securities through the stock market. Essential in wealth management, the valuation process allows the measurement of the strengths and weaknesses of a company and provides a historical reference for its development. Determining the value of a business is a complex task that is more like abstract art than an exact science.

Moreover, the concept of company value is better defined by a range of possible values than by an absolute and definitive dollar amount, since each method is associated with many assumptions and sensitive variables.

Subjectivity and biases may also be obstacles to a fair valuation analysis, a touch of behavioral finance is therefore necessary.

This book is not an academic and exhaustive list of all the existing valuation models; on the contrary, it focuses on essential methods grouped into three global approaches: the asset-based approach, the fundamental or discounted cash flow (DCF) approach, and the comparable company or market approach. The models explained are applicable to both small unlisted companies and large public companies.

Ultimately, this guide provides the financial theory and valuation basics needed to estimate the value of a small business.

As the name suggests, this is a practical book.

Many pedagogical cases (15) and illustrations (33) underpin its pragmatic and didactic content.

However, it also contains enough theories to satisfy an expert audience.

For example, the author guides the junior business appraiser by indicating benchmarks that can be applied directly. A company appraisal cannot reach perfection, but requires a great deal of humility and pragmatism, especially in the small- and medium-sized enterprise segment.

This book is ideal for business owners and additional players in the business world, legal professionals, accountants, wealth management advisers, and bankers, while also of interest to business school students and investors.

The objective is to offer the reader the necessary tools to value a small company ormore modestly, to provide the ability to understand, give constructive feedback, and improve an appraisal report performed by a valuation professional.

The book focuses on the theme of valuation.

It does not address the buyout of a business with all of its human, legal, fiscal, or negotiating strategy components.

It establishes the fair value of an independent entity, not the price of a controlling interest in a company benefiting from synergies .

The goal is not to deprive the business owner of the valuable advice of a recognized expert in the field of business acquisitions.

Further, this book does not aim to cover taxation, accounting, or consolidation principles, as there is already a multitude of high-quality books on these subjects.

Only chartered accountants or business lawyers are fully familiar with the accounting, legal, or tax environment of the companies for which they are responsible.

The reader can read this book following two approaches:

In the sequential theoretical approach, the reader discovers each method, which is accompanied by practical, small case studies.

In the pragmatic approach, readers begin directly with a synthetic case study on Company SEGA, a golf management company. Subsequently, they can gradually reference the theoretical points of the previous chapters.

A special thank you goes to Tula Weis, Executive Editor, to Uma Vinesh, Project Coordinator at Palgrave Macmillan, and to Zobariya Jidda, Project Manager.

Thank you to Cambridge Proofreading LLC and to Scribbr for improving my English writing style.

Je salue aussi mes deux enfants, Samantha et Fabian.