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NO RULE OF THUMB FOR VALUING SMALL BUSINESS

 IRVINE, Calif., March 16 /PRNewswire/ -- Two nearly identical closely held small businesses can sell on the same day for two radically different prices because of the differing needs of the sellers, according to a California-based business valuation expert.
 "The rule of thumb in valuing a privately held business is that there is no rule of thumb," said Conrad J. Tuerk of Tuerk & Associates, an Irvine-based investment banking firm.
 "The fair market value of a privately owned business is the amount that a willing and informed buyer will pay a willing and informed seller. There are no established multiples like six times earnings nor any other valid averages when it comes to valuing a private company. Each valuation is unique because no two businesses are the same, especially when considering the varying needs of the business owners," Tuerk revealed.
 "A 60-year-old business seller is less inclined to accept deferred payments stretched over a period of seven to 10 years than a younger seller, who likely will get a higher price from buyers with financing flexibility," continued Tuerk. "The seller sets the price, but the buyers sets the terms," he added.
 According to Tuerk, here are six key factors in determining the value of a private company:
 -- The market position and niche of the business;
 -- Historical sales, earnings, cash flows and balance sheets,
 appropriately adjusted;
 -- Market growth for the product or service and competitive
 conditions;
 -- Projected sales, earnings and cash flows;
 -- Requirements for capital expenditures and increased working
 capital;
 -- Prices at which similar companies are being sold in the
 marketplace.
 "Being privately owned and not driven to report optimum profits and asset values, it's normal to adjust or recast the historical income statements and balance sheets to show the company's true profitability and book value," Tuerk stated.
 "Today's typical smaller to mid-size business buyer is most interested in future earnings potential of the business. Tuerk valuations include carefully prepared projections including income statement, cash flow statement and balance sheet, usually covering five years. We also include research regarding the company's markets to help provide a credible revenue forecast," he concluded.
 -0- 3/16/93
 /CONTACT: Conrad Tuerk of Tuerk & Associates, 714-251-0400; or David Hoods of Rupert Public Relations, 310-377-0455, for Tuerk & Associates/


CO: Tuerk & Associates ST: California IN: SU:

SM -- NYSFNS6 -- 6346 03/16/93 07:06 EST
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Publication:PR Newswire
Date:Mar 16, 1993
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