Shannon Pratt Business Valuations - Business Valuation Body of Knowledge, Second Edition

• Preface xiii
• Acknowledgments xv
• Basic Formulas xvii

Section 1 Questions 1

Part I. Business Valuation Engagement Environment 1

1. Business Valuation Legal and Regulatory Environment 3
2. Business Valuation Professional Environment 5
3. Business Valuation Engagement 8
4. Litigation Service Engagements 11

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Part II. Terminology and Notation 13

5. International Glossary of Business Valuation Terms 15
6. Notation System Used in This Book 17

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Part III. Valuation Approaches and Methods 19

7. Overview of Valuation Approaches and Methods 21
8. Income Approach: Cost of Capital 23
9. Income Approach: Discounting Method 30
10. Income Approach: Capitalization Method 34
11. Market Approach: Guideline Public Company Method 38
12. Market Approach: Guideline Merger and Acquisition Method 41
13. Prior Transactions, Offers, and Buy-Sell Agreements 45
14. Adjusted Net Asset Method 47
15. Excess Earnings Method 49
16. Discounts and Premiums 51
17. Reconciliation and Value Conclusion 55

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Part IV. Analysis of the Company 57

18. Financial Statement Analysis 59
19. Using Economic and Industry Data 64
20. Site Visits and Interviews 67

Part V. Supporting Data 69

21. Sources of Supporting Data 71

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Part VI. Valuations for Specific Purposes 75

22. Tax-Related Valuations 77
23. Employee Stock Ownership Plans 79
24. Shareholder Buyouts and Disputes 82
25. Marital Dissolutions 85

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Section 2 Answers 87

Part I. Business Valuation Engagement Environment 87

1. Business Valuation Legal and Regulatory Environment 89
2. Business Valuation Professional Environment 90
3. Business Valuation Engagement 91
4. Litigation Service Engagements 93

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Part II. Terminology and Notation 95

5. International Glossary of Business Valuation Terms 97
6. Notation System Used in This Book 98

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Part III. Valuation Approaches and Methods 99

7. Overview of Valuation Approaches and Methods 101
8. Income Approach: Cost of Capital 102
9. Income Approach: Discounting Method 105
10. Income Approach: Capitalization Method 108
11. Market Approach: Guideline Public Company Method 111
12. Market Approach: Guideline Merger and Acquisition Method 112
13. Prior Transactions, Offers, and Buy-Sell Agreements 113
14. Adjusted Net Asset Method 114
15. Excess Earnings Method 115
16. Discounts and Premiums 117
17. Reconciliation and Value Conclusion 119

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Part IV. Analysis of the Company 121

18. Financial Statement Analysis 123
19. Using Economic and Industry Data 125
20. Site Visits and Interviews 126

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Part V. Supporting Data 127

21. Sources of Supporting Data 129

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Part VI. Valuations for Specific Purposes 131

22. Tax-related Valuations 133
23. Employee Stock Ownership Plans 134
24. Shareholder Buyouts and Disputes 135
25. Marital Dissolutions 136


• CPE Self-Study Examination 137
• Index 153

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