Business valuations are required for a variety of purposes,
ranging from notional valuations such as income tax
reorganizations, related party transactions and shareholder
disputes, to open market acquisitions and divestitures. Despite the
abundance of literature available on the subject, business
valuations often contain errors and inconsistencies that render the
conclusions meaningless, or worse, misleading. The consequences can
be significant when the business valuation conclusion forms the
basis of an actual transaction.
This newsletter sets out five common errors that are often made
in business valuation (even among valuation professionals) and how
to avoid them. Additional information can be found in the book
entitled Business Valuation (Howard E. Johnson; Canadian
Institute of Chartered Professional Accountants; 2012).
