Third Edition
Glenn M. Desmond, ASA, MAI
Bibliographic record and links to related information available from the Library of Congress catalog
SIC Numbers of Business Types Referred to in This Book
About the Author
About the Technical Editor
Preface
Acknowledgments
How This Book Is Organized
Chapter 1.
Understanding the Formulas
Concepts, Terms, and Definitions
Rules of Thumb Apply to Small Businesses
Standard Industrial Classification Codes (SIC Numbers)
Valuation Formulas and Rules of Thumb
Local Multiplier Ranges May Differ from Those in This Book
Sample Worksheet
Valuation Formulas
Net Equity Value
Local Multipliers
Fair Market Value
Net Revenue and Net Sales
Annual Owner's Cash Flow (OCF)
Pretax Cash Flow
Primary Formulas
Formula Assets
Values Expressed in Terms of U.S. Dollars
Benefits of Using Formulas
Formulas Are Market-Derived
Formulas Provide Market Comparison
Formulas Provide a Uniform Guide
Formulas Develop a Value Range
Formulas Are Easy to Use
Formulas Are Used for Preliminary Value Estimates
Cautions about Using Formulas'
Formulas Are General In Nature
There Is No Single-, All-Purpose Formula
Not All Businesses Are Salable
Common Elements That May Influence Value
Appearance of Facilities
Cash-Flow Trends
Competition
Condition of Merchandise
Covenant Not to Compete
Ease or Difficulty of Entry
Economic Trends: Local, Regional, National, and International
Industry Condition and Outlook
Lease Terms
Location
Longevity
Ownership of Premises
Pricing Policy
Product Quality
Repeat Patronage
Reputation
Return on Investment and Return of Investment
Sales Trends
Special Permits and Licenses
Large or "Super" Retail Discounters
Digital, Interactive Video, and Telecommunications Services
Terms of Sale
Chapter II.
Developing Stabilized Net Revenue and
Owner's Cash Flow: An Example
Chapter Ill.
Industry-specific Formulas with Rules of Thumb
for 31 Business Types
Accounting and Bookkeeping Practices
Apparel Stores
Appraisal Practices
Automobile Dealerships
Auto-Parts Retailers
Auto Repair Services
Bicycle Shops
Bowling Centers
Car Washes (Coin-Operated and Full-Service)
Check-Cashing Services
Coin-Operated Laundries
Dental Practices
Drinking Establishments
Drugstores
Dry Cleaners
Fast-Food Establishments
Fitness Centers
Flower Shops
Funeral Services and Mortuaries
Gasoline Service Stations
Hair Stylists, Beauty Salons, and Barbershops
Insurance Agencies and Brokers
Liquor Stores
Manufacturers' Sales Agencies
Newspapers, Weekly
Optometric Practices
Printshops, Commercial
Real-Estate and Business Brokerage Agencies
Restaurants
Travel Agencies
Veterinarv Practices
Chapter IV.
Rules of Thumb for 47 Additional Business Types
Answering/Secretarial Services
Appliance-Repair Services
Appliance Stores
Architectural and Engineering Services
Art and Craft Supply Stores
Automobile Dealers, Used Cars
Automobile Rentals
Bakeries, Commercial
Bakeries, Retail
Billboards
Bookstores
Camera Shops
Card and Gift Shops
Catalog and Mail-Order Houses
Chiropractic Practices
Clothing, Men's
Computer and Software Stores
Confectionary Stores
Convenience Stores
Delicatessens
Doughnut Shops
Employment Agencies
Fabric @Stores
Garden- and Automotive-Supply Stores
Hardware Stores
Hobby Shops
Home Furnishings Stores
Ice-Cream Manufacturing Companies
Ice-Cream and Yogurt Parlors
Janitorial Services
Jewelry Stores
Lawn and Gardening Services
Lock and Key Shops
Lumberyards
Marine Retailers
Meat Markets
Motorcycle Shops
Music and Video Retail Stores
Musical Instruments and Supplies Stores
Nail Salons
Office-Supply Stores
Pawnshops
Pet Shops
Recreational Attractions
Swap-Meets
Tire Stores
Towing Services
Chapter V.
Intangibles and Goodwill Valuation
Chapter VI.
Additional Sources of Information
Chapter VII .
Glossary