Regression analysis in business valuation, particularly the Direct Market Data Method (DMDM), relies on R-squared (R²) values. This article examines these statistical concepts, their interpretation and their implications for SBA 7(a) valuations. The Role of R-Squared in Regression Analysis R-squared (R²) measures the proportion of variance in the dependent variable (e.g., sale price) explained by … Continue reading Interpreting R-Squared in Business Valuation: A Cautious Approach to the Direct Market Data Method

Transaction databases are integral to the market approach in business valuation, providing empirical data on private company sales. This article examines three leading databases—BIZCOMPS, ValuSource Market Comps, and DealStats—highlighting their advantages, limitations, and implications for valuation accuracy. The report integrates commentary and research from valuation professionals and third-party sources to offer a well-rounded perspective. 1. … Continue reading BIZCOMPS, ValuSource Market Comps, and DealStats in Business Valuation

In states with liquor license quotas, the market value of a liquor license can significantly exceed the operating cash flow of the business holding it, creating a valuation challenge for SBA 7(a) loans. These loans prioritize the business as a going concern, focusing on cash flow rather than intangible asset premiums, often leading to a … Continue reading Liquor License Quotas and SBA 7(a) Lending — Navigating the Disconnect Between Market Value and Going Concern Appraisals