Your Unbiased Business Valuation in Texas

Our Texas Business Valuation Offer

The Nielsen Valuation Group provides unbiased business valuations. Our appraisals are well-weighted, nuanced, and fully compliant with IRS Revenue Ruling 59-60, with the goal of determining fair market value, as opposed to speculative valuations.

Our local presence in Texas gives us a good understanding of the local business community and market. It also allows us to easily conduct an onsite assessment of the company and conduct face-to-face interviews when necessary.

Proudly Fully IRS Compliant

When looking for business valuation services in Texas, you will certainly find different types of appraisers. Each has his or her own preferred methodology.

At Nielsen Valuation Group, we stand firm in our belief that fair market value should be the guiding star – what someone would be willing to pay for the business in the marketplace.

This is also how the Internal Revenue Service (IRS) views business appraisals. Their Revenue Ruling 59-60 states that business valuations cannot rely on pre-determined formulas or standardized tables of cap rates. Instead, the nature of the business, risks, and earnings stability or irregularity must be considered, among other things.

We fully comply with this ruling when performing a business appraisal. In practice, this means that we place great emphasis on evaluating the actual condition of the business, its track record, and its risks, rather than relying on purely theoretical frameworks that have little or no connection to real-world transactions.

We Always Normalize First

Careful preparations are an important part of any business valuation. Correct inputs are a prerequisite for an accurate appraisal.

Therefore, we spend considerable time reviewing and normalizing the company’s balance sheet and income statements before doing any calculations.

• Income statements often include expenses and revenues that should not be part of the analysis. Common examples include one-time payments, sale of assets, or personal expenses of the owner.
• The balance sheet shows the book value of assets and liabilities. However, book value rarely equals market value. Therefore, we need to estimate the actual market value of the major assets. Sometimes liabilities need to be adjusted as well.

After doing this kind of adjustments, we have the right inputs to determine the fair market value of the business – a price at which a buyer and seller would likely agree in a free and open market.

We Only Use Robust Methodologies

Some appraisers use pre-determined formulas because they provide an easy and quick way to perform an appraisal while appearing professional on the surface. However, you must understand that they never produce satisfactory results and often lead to an oversimplification or a completely misleading valuation.

They can also lead to a false sense of security by giving the impression that they are accurate.

At Nielsen Valuation Group, we never rely on pre-determined formulas. We use one or more valuation approaches, depending on the situation:

• Market approach: Looks at what similar businesses in Texas are selling for.
• Income approach: A valuation based on earnings or cash flow.
• Asset approach: Calculates net asset value at market price.

The choice of valuation method is important, but it is equally important to understand how it should be applied to produce a sound and non-speculative valuation.

If marketability discount rates are applicable, we calculate them based on the situation in the company, not based on theoretical frameworks.

Our Valuations Are Always Customized

There is no business valuation that suits all companies in all kinds of situations. The methods used and how they are applied must be chosen based on the situation – the type of business and the purpose of the valuation.

When you contact Nielsen Valuation Group, we offer a 30-minute free consultation. This allows you to explain your needs and why you want a valuation. It allows us to provide you with a customized proposal.

In addition to receiving a valuation that is perfectly tailored to your needs, you also benefit by not overpaying for services that are not relevant to your situation.

How Much is My Business in Texas Worth?

Want to sell your business in Texas? Then you need to remember that its true value in the marketplace is what a buyer is actually likely to pay – not what a theoretical calculation says.

We often meet sellers who want to price their business based on potential. The problem is that buyers are not willing to pay for potential because that is their upside in the investment. They are also taking on the risk.

A balanced business valuation will help you determine a credible value for the business, which will increase your chances of finding a buyer.

Survivorship bias is another issue among sellers. They may point to successful startups like Stripe, Tesla, Uber, Meta, or Alphabet and say, “This is where we are going”.

But what professional investors know is that only about 1 in 10 startups make it in the long run. And they have to price in that risk when they bid for your company.

Survivorship bias – what does it mean? It is the tendency to focus on successes while overlooking failures, leading to misleading conclusions. This happened during World War II when analysts concluded that fighter planes did not need to be strengthened around their engines, cockpits, and parts of their wings because they showed no signs of damage. The fact was that those hit there never returned. This is the origin of the term.

Do You Want to Do a Business Valuation in Texas?

Nielsen Valuation Group provides unbiased and Revenue Ruling 59-60 compliant business valuations in Texas that reflect real-world transactions. Contact us today for a free 30-minute consultation.

FAQ – Frequently Asked Questions