Business Valuation: An Integrated Theory

Second Edition

by Z. Christopher Mercer and Travis W. Harms, CFA, ASA/ABV


Format: Hardcover
Price: $95.00
Page Count: 243 pages
Publication Date: October 2007


Whether you are an accountant, auditor, financial planner, or attorney, Business Valuation: An Integrated Theory, Second Edition enables you to understand and correctly apply fundamental valuation concepts. Thoroughly revised and expanded, the Second Edition demystifies modern valuation theory, bringing together various valuation concepts to reveal a comprehensive picture of business valuation.

With the implementation of new accounting pronouncements mandating the recognition of numerous assets and liabilities at fair value, it has become critical for CPAs charged with auditing financial statements to understand valuation concepts.

With thoughtful and balanced treatment of both theory and application, this essential guide reveals:

  • The “GRAPES of Value”—Growth, Risk and Reward, Alternative Investments, Present Value, Expectations, and Sanity
  • The relationship between the Gordon Model and the discounted cash flow model of valuation
  • The basis for commonly applied, but commonly misunderstood valuation premiums and discounts
  • A practical perspective on the analysis of potential business acquisitions

Grounded in the real world of market participants, Business Valuation, Second Edition addresses your need to understand business valuation, providing a means of articulating valuation concepts to help you negotiate value-enhancing transactions.

If you want to get back to valuation basics, this useful reference will become your guide to defining the various levels of value and developing a better understanding of business appraisal reports.

The first book to show why business appraisers do what they do and how valuation concepts are interrelated, Business Valuation: An Integrated Theory, Second Edition provides a concise discussion of the most widely debated valuation topics. Fully revised and updated, it defines and explains valuation in the context of the discounted cash flow and Gordon models, providing the most unified and comprehensive framework for thinking about the sources of valuation premiums and discounts.

An excellent basis for understanding and correctly applying modern valuation theory, the Second Edition integrates various valuation concepts to reveal a complete and clear picture of business valuation. This edition includes a new chapter on the valuation of S corporations, as well as an expanded treatment of valuation from the perspective of nonmarketable minority shareholders. Business Valuation: An Integrated Theory, Second Edition helps readers:

  • Understand the organizing principles of business valuation
  • Examine the relationships between the Gordon Model and the DCF model of valuation
  • Define the levels of value in the context of enterprise and shareholder cash flows
  • Apply the Quantitative Marketability Discount Model (QMDM)
  • Defend and explain the valuation of S corporations

A variety of business, finance, valuation, legal, and accounting professionals will benefit from the comprehensive framework for applying sound financial reasoning to practical valuation problems presented in this book. Straightforward and well written, this is the essential guidebook for integrating valuation theory and practice.


Testimonials

I find The Integrated Theory of Business Valuation to be a significant contribution to the valuation community. I will not start a valuation project or assignment without re-reading my dog-eared and highlighted copy. It has changed my thinking in some areas, provided support, and added confidence to my thought processes in other areas. It provides a principle-based foundation that the analyst can keep coming back to as they work their way through the myriad of decisions and inherent and embedded assumptions within the valuation process.

Steven W. Campana, CPA/ABV
Doyle & Keenan, P.C.