RiskPoint Zone Valuation Calculator  
INSTRUCTIONS
$ 1. Enter company actual or projected annual EBITDA.
   2. Select the annual rate at which you expect EBITDA to grow.
   3. Select the size range of your company in annual sales.
   4. Select your company's industry. 
   5. Select an estimate of your Company Specific Risk. - Read below!
  6. Calculate estimated valuation and Return on Risk.
VALUES  ROR VALUE     
Estimated valuation*    
Valuation before Company Specific Risk                                                   
Value lost due to Company Specific Risk                                                  
Discount rate = %                                                 

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RISKPOINT ZONE VALUATION CALCULATOR

The RiskPoint Zone Valuation Calculator is designed to give a general estimate of the value of a business. The discount rate or risk rate is estimated based on the Build-Up Model. This is a generally recognized valuation model which incorporates equity premiums, industry premiums, company size premiums, and the company specific risk premium ("CSR"). These premiums are added together to determine the discount rate of a business. The lower the discount rate, the lower the risk, the greater the value of the related business.

Company Specific Risk  ("CSR")

The CSR consists of internal business risks that can reduce the value of a business by increasing its discount rate. It is the only risk premium that can be directly addressed by a business owner to increase the value of his or her business. These risks include, but are not limited to management issues, capitalization, receivables collections, cash management, growth issues, asset management, and financing methods. The CSR cannot be reliably estimated unless a RiskPoint Analysis is implemented. The best managed large companies will have a CSR of 2% - 3%.  A start-up company may have a CSR as high as 50%. A well managed small business will have a CSR in the range of 10% - 20%.

Return on Risk Value ("ROR")

Return on Risk is the amount a business valution increases for then next 1% reduction in the discount rate, generally caused by a reduction of the CSR. ROR is one of the best indicators of how business risk affects the valuation of a business. As the discount rate goes down, the ROR increases exponentially.

*DISCLAIMER

The business valuation calculator  (ROR Calulator) used in this report is designed as a tool to allow users to establish valuation estimates.  It is not intended to provide investment advice, or to provide a firm business valuation, or replace an independent business appraisal provided by a qualified business valuation professional in your market or area. We strongly recommend you consult professional business advisors including, but not limited to:  Business Brokers, Business Attorneys, CPA's, Financial Advisors, Certified Business Appraisers, and Tax Advisors before making any financial or investment decisions.

This website and the material and information contained within are provided to you on an "as is" basis without any warranties of any kind. In no event shall RiskPoint Zone, LLC be liable for any direct, indirect, incidental, punitive, or consequential damages of any kind whatsoever with respect to this service, services, the information, and the products.

 

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