Valuing a Business, 6th Edition

April 2022 Hardcover

Shannon Pratt

McGraw-Hill Co.

Since the first edition was published in 1981, the profession of business appraisal has matured immensely. The IRS has come out with business valuation guidelines, and the AICPA has published their business valuation standards. While each organization’s standards or guidelines are slightly different from the others, there is unanimous agreement on the central concepts of business valuation.

The seminal book on business valuation is back and better than ever. Shannon Pratt wrote and published the groundbreaking first edition of Valuing a Business in 1981. The 6th edition is written for business appraisers and users of business appraisal reports by some of the most accomplished appraisers in the profession in honor of Dr. Pratt and with his input and blessing. The 6th edition provides a comprehensive reference and update for business appraisers, a complete self-contained text for both academic courses and beginning practitioners, and an easy-to-use reference for non-appraisers who use and/or evaluate business appraisals.

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Table of Contents

PART I State of the Profession, the Engagement, and the Basic Theory

1. Business Valuation Standards and Credentials

2. Defining the Assignment

3. Business Valuation Theory and Principles

Part II Gathering and Analyzing Data

4. Gathering Company Data

5. Site Visits and Interviews

6. Researching Economic and Industry Information

7. Analyzing Financial Statements

8. Financial Statement Ratio Analysis

PART III Business Valuation Approaches and Methods

9. Income Approach: Discounted Economic Income Method

10. Income Approach: Capitalized Economic Income Method

11. Income Approach: Developing the Discount Rate

12. Income Approach: Forecasting Economic Income

13. Market Approach: Guideline Public Company Method

14. Market Approach: Guideline Transaction Method

15. Asset-Based Approach: The Capitalized Excess Earnings Method

16. Asset-Based Approach: Asset Accumulation Method

PART IV Discounts, Premiums, and the Value Conclusion

17. Control versus Lack of Control: Premiums and Discounts

18. Market Evidence of Control Premiums and Discounts for Lack of Control

19. Discounts for Illiquidity and Lack of Marketability

20. Other Valuation Discounts

21. Valuation Reconciliation and Conclusion 

PART V Writing and Reviewing Business Valuation Reports

22. Writing the Business Valuation Report

23. Sample Report

24. Reviewing a Business Valuation Report

25. Valuing Intangible Assets

PART VI Valuing Specific Securities and Interests

26. Valuing Debt Securities

27. Valuing Preferred Securities

28. Introduction to Stock Option Theory

29. Valuing Employee Stock Options

30. Valuing Complex Capital Structures

31. Valuing Interests in S Corporations Other Pass-Through Entities

32. Valuing Interests in REITs and other Real Property Holding Entities

33. Valuing Real Property with a Business Component

PART VII Valuations for Specific Purposes

34. Valuations for Gift, Estate and Charitable Contribution Purposes

35. Gift, Estate, and Charitable Contribution Court Cases

36. Valuation Provisions in Buy-Sell Agreements

37. Valuation for Income Tax Purposes

38. Income Tax Court Cases

39. Valuations for Employee Stock Ownership Plans

40. ESOP Court Cases

41. Valuations in Shareholder and Partner Disputes

42. Shareholder and Partner Dispute Court Cases

43. Valuations for Marital Dissolution Purposes

44. Marital Dissolution Court Cases

45. Valuations for Financial Reporting

46. Valuations for Ad Valorem Taxation

47. Fairness Opinions

48. Solvency Opinions

PART VIII Litigation and Dispute Resolution

49. Litigation Support Services 

50. Expert Testimony

51. Alternative Dispute Resolution

About the Website

Appendices to each Chapter online at Content is listed in About the Website.