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Reasonable Compensation: Application and Analysis for Appraisal, Tax and Management Purposes
Business Valuation Resources, Oct 2010, Pages: 287
For many closely held businesses, no single operating expense impacts the profitability as much as compensation does. In all private companies, an expense that is discretionary to the owner in terms of size, timing and payment method may represent not only compensation for services rendered, but also disguises dividends or profit distribution. The valuation of a business could be greatly affected by owner's compensation, or the lack there of.
This Guide helps practitioners whenever employee-owner compensation is subject to review and adjustment. It is also an invaluable resource when valuing non-compete agreements or calculating personal vs. enterprise goodwill.
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