Your Unbiased Business Valuation in Dallas Fort Worth

Our Business Valuation Offer in the Dallas-Fort Worth Area

Nielsen Valuation Group provides unbiased business valuations in the Dallas Fort Worth area, as well as the rest of the state of Texas. Our valuations are fully compliant with the Internal Revenue Service (IRS) Revenue Ruling 59-60.

The goal is to determine the fair market value of the business, reflecting real world transactions – not inflated and implausible numbers based on speculation or theoretical formulas.

Our local presence in Dallas Fort Worth gives us a solid understanding of the local business community and market dynamics in the area. It also gives us the advantage of being able to visit the company in question and conduct face-to-face interviews if necessary.

What Does It Mean for Us to Be IRS Compliant?

IRS Revenue Ruling 59-60 provides unique guidance on how the Internal Revenue Service views how business appraisals should be conducted, emphasizing a thorough and case-specific approach. Unfortunately, many valuation firms in Dallas Fort Worth overlook these principles.

In short, some key points of the ruling are that:

• No prescribed formulas can be used to determine the value of a business
• Be careful with standardized capitalization rate tables because they fail to capture the unique situation in the business
• The nature of the business, its earnings history and stability, and the risks involved are critical components of any valuation.

We always follow the spirit of this ruling in all our business valuations. By focusing on the actual situation of the company, its track record, risks, and prospects, we ensure our valuations reflect real-world transactions rather than theoretical models or speculation.

We Always Normalize the Financial Statements

Any thorough business appraisal begins with normalizing the financial statements. This means verifying that the inputs are correct. It is essential in order to obtain a correct valuation.

This is one of the most time-consuming parts of any valuation, and unfortunately, many valuation firms overlook its importance.

It includes:

• Normalizing the balance sheet: The balance sheet only shows the book value, not the market value of the assets, and therefore needs to be adjusted. Sometimes liabilities need to be adjusted as well.
• Normalization of the income statements: Sales of assets, one-time payments, and the owner’s personal expenses are examples of adjustments that must be made before any calculations are made.

Once all the adjustments have been made, we have the right premises for a fair market valuation.

The Core of All Our Business Valuations: Robust Methodologies

Nielsen Valuation Group does not take shortcuts. We never use pre-determined formulas to quickly arrive at a valuation. Such shortcuts always lead to oversimplification. Ironically, complex formulas can give the false impression of providing an accurate valuation.

Instead, we do the hard work of uncovering the true value of the business by looking at what is really going on in the company.

We use one or more valuation approaches that we tailor to the situation:

• Income approach: A valuation based on earnings or cash flow.
• Asset approach: A valuation based on the market value of assets minus liabilities.
• Market approach: A comparison to what other Dallas Fort Worth businesses are selling for.

Sometimes marketability discounts are necessary. For example, when valuing a distressed business or a business that is being liquidated. We always perform such calculations based on the situation in the company, as opposed to relying solely on theoretical studies.

Customized Business Appraisals in Dallas Fort Worth

Every business is unique. This is one of the basic principles of IRS Revenue Ruling 59-60. It is also one of the core principles we follow. We never take a one-size-fits-all approach.

When you contact us, we always offer a free 30-minute consultation. During our meeting, you will have the opportunity to describe the business in question and the reason for the valuation. With this information, we are able to provide you with a customized quote.

We know that some appraisers overcharge for aspects of an appraisal that are not necessary. With us, you can be sure that you are only paying for what you need.

What is The Value of My Business?

Are you thinking of selling your business in Dallas or Fort Worth? We can help you determine a price that will increase your chances of finding a serious buyer.

Remember, the real value of a business is what someone is willing to pay for it.

Many business owners we talk to say they want the potential of the business to be reflected in the valuation. However, buyers never pay for potential. At least not in cash. They might pay for “potential with potential,” such as shares in another high-risk business. Instead, they pay for the company’s current situation and proven track record.

Another common mistake, especially among startups, is to underestimate long term risk. Many suffer from survivorship bias. They point to successful cases like Uber, Alphabet, Tesla or Meta and reason that their business will follow a similar path.

However, investors or buyers know their numbers. They know that about 1 in 10 startups will not survive in the long run, and they take that into account when investing.

While overvaluing your business is a common mistake, it is also important not to undervalue it. A balanced, fair market valuation can help you determine the right price.

The origin of survivorship bias: During World War II, studies were made of planes returning to base to decide where to make armored reinforcements. Since none of the planes had damage to the cockpit and engines, it was incorrectly concluded that these parts were safe. The reality was that planes hit in those areas had crashed. Today, many startup founders make the same mistake when looking at successful startup cases.

Do You Want to Do a Business Valuation in Dallas or Fort Worth?

Nielsen Valuation Group provides an unbiased and Revenue Ruling 59-60 compliant Dallas Fort Worth business valuation, that reflect real-world transactions. Contact us today for a free 30-minute consultation.

FAQ – Frequently Asked Questions