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Chapter 3 - Economic and Industry Analysis
IACAM has created an essential list illustrating the core concepts of public and private business valuation. These key principles can be found in the free, online-version of The Executive's Guide to Business Valuation. To view this free IACAM executive guide, please click the blue link above.
Economic Data - Overview
Why is it critical to have a custom industry and economic section included in a valuation report? For starters, IRS examiners who review valuations, whether business valuations or real estate appraisals, often rigorously scrutinize these report components. It is rumored that IRS examiners will perform detailed Internet searches to substantiate key industry trends. IRS valuators will inspect the economic and industry sections of a report to ascertain the interrelationships, if any, amongst the local industry or economy and the subject company.
Consequently, sufficient microeconomic details on the local economic landscape are often very important. This is particularly valid if the business has less than $1 million in sales since such an enterprise may often sell solely to local clients.