Establishing the Value of Your Business

Some owners have a figure in mind of what their business is worth; often it’s inflated because of their emotional attachment. On the other hand, many owners undervalue their business because they do not understand the technicalities of the various valuation methodologies and which of these is most appropriate for their specific business type.

Experience has shown that there is also a large percentage of business owners who do not know what their business is worth, nor how to go about establishing its true market value. Link uses many of the established valuation methodologies, often using a range of different options in combination to establish the most accurate figure. This figure is then further scrutinised by comparing the theoretical value with current and historical sales information from the Link database. This ensures that the valuation appraisal accurately represents what a purchaser will pay in the current market.

Profitability and Risk

Most businesses are valued based on a combination of assets and the cash surpluses generated. The risk factor of the specific business is also taken into account. This is the degree of threat from existing or potential competitors, changes in technology or consumer trends and many other factors that may affect earnings or costs.

“Barriers to Entry” is another issue that is taken into account and involves evaluating the degree of difficulty or barriers a competitor may face should they decide to establish a similar business. For example, businesses which require minimal capital investment or technical knowledge are said to have a very low barrier to entry and consequently, may have a lower value.

Most businesses are valued on a “going concern basis” rather than the value of company shares. Purchasers are reluctant to buy company shares for a variety of reasons including the unknown possible future tax, credit or legal liabilities, or the danger of inheriting contingent liabilities based on historical trading. The price of the business is usually made up of three components:

1. Intangible assets.

The future earning potential of the business reflective of historical earnings potentially including intellectual property (IP), right to products or services, benefits of a lease, contracts, techniques and procedures as well as goodwill.

2. Tangible assets.

The fixtures, fittings, plant and equipment used by the business to generate its income. This component is normally calculated according to its depreciated book value.

3. Stock.

Stock purchased by the business for resale or manufacturing purposes. It is valued at the historical cost price. An allowance may be made for old or obsolete stock.

Valuation Methodologies

Generally, two or more of the following methods are used to appraise the value of a business:

1) Industry Ratios

2) Asset Based

3) Earnings Based

4) Market Based

The appraised value is then subjected to the “sanity test”. Some businesses are in a growth industry where their track record is well established and their projections solid. Other businesses may be in what is known as a sunset industry where projections are less optimistic. Many factors affect the true market value of a business, including business sector, economic conditions, business cycles, interest rates, labour availability and a whole host of other influences. Similarly, the value of trademarks, brands, intellectual property and goodwill is not always easy to quantify. Balancing all these factors with the book valuation of businesses establishes the true market value.

1. Industry Ratios

The value of the business is based on its sales record compared with industry averages. This method is often used for small businesses and franchises where there is an established track record within a specific industry. It may also use a formula of multiples of weekly sales or an average derived from sales of similar businesses.

2. Asset Based

In businesses where there is history of low earnings or perhaps even losses, the Asset Based approach is generally used. Using this method, the value of the collective assets (both tangible and intangible) will determine the value of the business. In many cases there will be an element of goodwill payable, even where a business is not trading profitably. Although the assets alone may be purchased on the open market, there is often value in purchasing assets as a going concern, which may include customer lists, relationships with suppliers, an assembled workforce, brand awareness and reputation, among others. Calculating intangible assets, including goodwill requires some subjective judgement coupled with experience and the use of market comparisons.

3. Earnings Based

Generally the earnings based approach is used for larger businesses and places emphasis on earnings rather than assets. There are various methods used when employing the Earnings Based approach to appraisals. Return on Investment (ROI) or capitalisation of earnings is common, as is the application of earnings multiples.

Earnings Based value is determined by considering:

A. The level of return that could be expected by investing in the business in question, taking particular account of the perceived level of risk and realistic costs of management.

B. The “industry average” multiplier on true earnings. This multiplier is market driven and varies according to perceived industry risk factors, perceived earnings sustainability and historical comparisons. The multiplier used most often in this approach is EBIT (Earnings before interest and tax) but others are frequently used and it is critical that you are comparing “apples with apples” when discussing multipliers.

C. The fair market value of the unencumbered tangible assets of the business e.g. plant, fixtures, fittings, equipment, stock and the tangible and intangible assets which may include intellectual property.

EXAMPLE OF ASSETS BASED METHOD

A dry-cleaning business has been breaking even and the owners would like to sell and move on. The business has tangible assets with a total book value of $135,000, $5,000 of stock (all saleable), no bad debts and will pay all creditors. The fair market value of the tangible assets has been assessed as $110,000 and intangible assets and goodwill at $15,000. Therefore the fair market value of this business is calculated as follows: $110,000 (tangible assets) %2B $15,000 (intangible assets and goodwill) %2B $5,000 (stock) = $130,000.

EXAMPLE OF ROI

Tom’s manufacturing company produced an adjusted net profit of $160,000 (EBPITD). The net assets (Valuation of plant and stock) for the business were $240,000 and a fair salary for Tom (owner) is $70,000. If someone was looking to invest in this business they could expect a 25% ROI, as this business offers a low to medium-risk investment opportunity.

To calculate the ROI value for Tom’s business:

Business profits (EBPITD) ………………………$160,000

Minus owner’s salary ………………………………$70,000

Profit ……………………………………………………$90,000

Return on Investment

Profit of …………………………………………………$90,000

Divided by desired return ………………………………..25%

Valuation appraisal ……………………………….. $360,000

4. Market Based

There will be certain instances where no amount of sound theory or application of complicated methodologies alone will suffice. It is not uncommon that a willing buyer and a willing seller will agree on a value that defies all traditional appraisal methodologies. In other cases the use of traditional appraisal approaches produce unrealistic values that have no bearing on market realities. It is important in any appraisal to overlay relevant market data and multiples achieved in similar businesses “in the real world”. Unfortunately the level of information available in Australasia is not as sophisticated as that available in other parts of the world.

How will taxes affect your pay out?

There are tax issues you may need to consider when selling your business. For instance, if you sell the plant and equipment (or company car) for more than the depreciated book value, you may have to pay back some of the tax you claimed when the items were depreciated (depreciation claw-back). Other tax liabilities may be incurred on the profit of land and buildings if they are included in the sale. It is vital that you fully understand your tax position when selling your business, and professional advice should be sought.

“Any desktop valuation involves a substantial amount of subjective judgment. The real test of the value of a business enterprise, like any asset, is what a buyer is prepared to pay.”

Five Ways to Protect Yourself When Selling Your Business

I read with interest a report of April 23, 2008, entitled “Millions involved in local business purchase scam” published in the Christian County Headliner News. As a certified public accountant that has represented buyers/sellers in business sales transactions and also as Managing Partner of Sunbelt Business Advisors – a business brokerage firm, I thought it beneficial to write about the many red-flags that were present in the article. Red flags that others should be aware of and protect themselves against as they attempt to either sell or buy a business.

SMALL BUSINESSES ARE NORMALLY SOLD AS AN ASSET PURCHASE AND NOT A STOCK PURCHASE. This transaction appears to have been a stock purchase and not an asset purchase. This should have been one of the first very large red flags. Small, privately held businesses are almost never sold as a stock purchase. A stock purchase means the current owners legal entity-the company, continues on instead of the new buyer creating a new company. In a stock purchase the new owners get everything the sellers business owns – bank accounts, receivables, any potential and actual liabilities. This includes contingent liabilities the new owner may not even know about. Additionally, a stock purchase does not allow a new owner to get stepped up basis of the company furniture, fixtures and equipment. The stepped up basis of the FF&E could mean thousands of dollars in tax savings to a new owner that would be very beneficial the first few years of ownership. A buyer walking in and immediately wanting to purchase the stock of business and assume all liabilities, potential future liabilities – known or unknown and leaving the additional depreciation on the table is almost unheard of. A normal asset purchase agreement (not a stock purchase) would have generally excluded cash and bank accounts of the prior company. The new owners in an asset purchase agreement, unlike a stock purchase would not have been able to transfer funds from the company accounts. They would need to open new bank accounts in their new company name.

AT CLOSING, BUYERS FUNDS SHOULD BE AVAILABLE. Apparently this deal closed without confirmation or having actual funds from the buyer. No business purchase transaction should close without having funds available and present at closing. This would be the same as selling your house to someone, closing the transaction, but the buyers not having loan approval yet. You wouldn’t do it and neither should sellers of small businesses.

ALWAYS USE A QUALIFIED CLOSING ATTORNEY. The sale of a business should be closed by a qualified closing attorney. Qualified closing attorneys will have their own space and normally not need to use others. A qualified closing attorney will make sure all legal documents are in order; make sure funds are available to pay the seller and file all required legal and IRS documents. Anyone selling or purchasing a business should insist upon having a qualified closing attorney conduct the closing. The absence of a qualified closing attorney should be a red flag.

USE A QUALIFIED BUSINESS BROKER – DON’T TRY IT ALONE. Not using a qualified, professional business broker is another red flag. Can business deals be completed without using a business broker? Certainly! One can also write their own contracts without using an attorney or prepare their own tax return without using a CPA, but it isn’t necessarily the smartest thing to do. Especially when talking about the sale of a business which is probably one of the largest if not the largest asset a person owns. Something as important as this should not be attempted alone. A qualified business broker will help educate the seller as to the process, help establish a valid market price, effectively market the business, screen buyers, and help qualify buyers, assist with negotiations, work with existing seller CPA and attorney, and work with closing attorney and overall management of the process and be there to advise the seller as to red flags!

NEVER CHANGE THE BANK ACCOUNTS UNTIL YOU HAVE YOUR MONEY. Another subtle, but yet red flag is it appears the seller changed the signature cards at the bank(s) and the names of the people allowed access. Even in a stock purchase, the current bank account holder – the seller would have to have the bank change the names and cards. Obviously, if this did in fact happen, it happened prior to the seller having funds from the buyer. The new buyer also apparently had the “keys” to the business before the seller was paid the purchase price. It is like selling your car to someone and agreeing to be paid at some future date; while you watch the “new buyers” that you just met drive off into the sunset with your car. You probably will never see your money or your car.

Most small business stories like your article remain non-public. Just like most financial frauds that occur at small businesses. People do not like to talk about the failures of small business transactions but, they are happening all the time and all across the country. It is very important that sellers and buyers understand the process of selling/buying a business, watch for red flags and use qualified professionals to help them in the process. Doing so will save them money, time and effort and make for a much better business transaction.

A Brief History of Metallica

Metallica have easily been arguably the best, most influential and most respected Heavy Metal band of the 80’s and the 90’s. Instead of drifting off in their own success, they brought the music back down to Earth, back to the street, where it belongs.

The band formed after a series of events in 1981: Lars Ulrich, a Danish born drummer living in the Bay Area of San Francisco, was looking for someone to ‘jam’ with. He put an add in the local Trading Post, ‘The Recycler,’ stating that he was interested in playing drums for a band. To answer his add was James Hetfield, a 19-year-old guitarist, also living in the Bay Area of San Francisco. The two started playing together their favorite Heavy Metal songs, such as those by such bands as Diamond Head, and Black Sabbath. Hetfield later asked roommate (and part-time bassist), Ron McGovney to join the band, and McGovney accepted the offer. The trio then recruited lead guitarist Dave Mustaine, and the band was complete, or was it….

With Hetfield doubling up on vocals, the band recorded their first demos in mid-1981. The demos entitled “No Life ‘Till Leather,” became the product of bootleggers, and the band became popular among the Underground Heavy Metal community.

Later, when Hetfield and Ulrich attended the concert of a fellow Bay Area band called Trauma, they were stunned by the ‘volcanic’ ability of Trauma’s bassist: Cliff Burton. Subsequently, McGovney was kicked out of the band by Hetfield and Ulrich, and the very impressive Burton was asked to join Metallica. After some strenuous decision making, Burton decided to join. Metallica then started to play concerts, mainly as a warm-up band for established Metal acts such as Saxon, and Metallica’s popularity grew, while they hadn’t even released their first album yet.

Mustaine, the band’s lead guitarist became increasingly unpopular with the other three members of the band. His daily intake of drugs and alcohol was not liked by Hetfield and Ulrich, so, in turn, Mustaine was kicked out of the band.

The band searched for another lead guitarist. They attended many concerts of other Bay Area bands, and, they got lucky. They found Kirk Hammet, a guitarist playing for a little known band called Exodus. The trio were in awe of Hammet’s lightning-fast fingers which played intricate minute-long solos, that left the fret board on the guitar smoking after they had finished. Hammet was therefore asked to join the band, and after an age of thinking, Hammet decided to leave Exodus, and join Metallica.

For the next year, Ulrich, Hetfield, Burton and Hammet worked on improving the songs they had written in the No Life ‘Till Leather demos, and wrote new songs, all while performing concerts all over the country. A recording contract was secured with American recording label Elektra, and in 1983, the band released their first album: “Kill ‘Em All.” Kill ‘Em All contained improved songs from the No Life ‘Till Leather demos, and couple of songs written by the band after Burton and Hammet had joined. The album was a huge success amongst the Heavy Metal community, but it never really broke into the mainstream music market.

After the release of Kill ‘Em All, the band decided to cut down on the touring, and decided to work instead, on writing their next album. “Ride the Lightning,” the band’s second album, was released almost exactly a year after Kill ‘Em All. It was the product of a year’s hard work. As with Kill ‘Em All, Ride the Lightning was a success, and it continued in the traditions of the speed-orientated music from the first album.

Metallica’s popularity grew with the release of their album, “Master of Puppets,” released in 1985. Some say that ‘Puppets’ is the best all time Heavy Metal album. It, as with the previous albums was a great success, and Metallica were more popular than ever before.

After the release of ‘Puppets, the band decided to go on a world tour, mainly because on the huge success of their albums. The tour was launched in Copenhagen, Denmark, drummer Ulrich’s home town.

While on tour in Sweden, tragedy struck. Metallica’s tour bus crashed on a long trip between cities, and bassist Burton was tragically killed. After Burton’s funeral, the band wondered if they should continue playing or not, and they decided they would play on….

Auditions were held by Metallica for a new bassist, and many budding bass players turned out to see if they were good enough to join Metallica. Jason Newstead, with his heavy, rhythmic technique on the Bass, was chosen as the new bassist for Metallica. To work Newstead into the Metallica mold, the band decided to go back to their roots, and to play some songs written by their favorite bands, the bands which had influenced them the most in their early career. The cover songs (as they are known), were recorded, and the songs were released in 1986’s $5.95 EP entitled “Garage Days Revisited.” Now the EP is extremely rare, and is considered a collector’s item.

With Newstead on board, 1987’s “….And Justice For All,” was released, Metallica’s fourth album. For the first time, Metallica broke into mainstream music via the album, and it entered the American and British Top 20 in the music charts. From the album, the singles “One,” and “Harvester of Sorrow,” were released, and the singles also had success in the charts.

After the album, the band decided to tour again, and the “Justice” tour, as it came to known, lasted for about 3 years, from 1987 to 1990.

1991’s self-titled album “Metallica,” brought the band their biggest success to date, selling 7 million copies in the USA alone. The album became Number One in the American Music Charts, and the singles “Unforgiven,” “Enter Sandman,” and “Nothing Else Matters,” became huge hits, each entering the Top 10 in both the American and British singles charts.

Then, it was back on the road again for Metallica, for yet another world tour. This time the tour lasted for four years, and the band played in such obscure place in the world such as Moscow.

The Release of 1996’s greatly-anticipated “Load” album was not liked by many of Metallica’s hard-core fans. For Load, Hetfield, Ulrich, Hammet and Newstead had decided to step away from the speed-metal scene, and decided to step into the arena of Alternative Rock. Although the album debuted at number one in the American charts, the older Metallica fans did not take to it greatly, they claimed that Metallica had “sold out.” Metallica lost some fans, but they also gained many more new fans, who were more interested in the Alternative side of Metallica.

For the next year, in between touring, Metallica wrote songs for the next album, not phased buy the comments made by their so called fans on the Load album. Reload, the seventh album, was released in 1997. The album debuted at number four in the American charts, and like the Load album, the older fans did not like it, but the legions of younger fans continued to grow.

Metallica have always been, in their 19 year career, a constant force on music. Metallica have changed the rules for all Heavy Metal bands, not only are they respected by the fans, but also by mainstream record buyers and critics.

Many bands have emerged from the Metallica way of playing music. Kirk Hammet has become one of the most copied guitarists in all forms of music, James Hetfield has developed a signature growl in his vocals, as with his rhythm guitar, while Lars Ulrich’s constant bang of the drums clicks in perfectly with Jason Newstead’s bouncing, yet heavy, bass tunes. Metallica have, single-handedly changed the face of metal, forever.

Illiquid Assets – Donating and Appraising Promissory Notes, A Tax-Efficient Plan

Get a Tax Deduction for Donating a Non-Cash Asset-Promissory Note Donations

Illiquid Financial Asset

A financial asset that is difficult to sell because of its expense, lack of interested buyers, or some other reason is called “illiquid”. Examples of illiquid assets include: Restricted and private stock, LLC and limited partnership interests, deeds and mortgages, promissory notes, mineral rights including oil and gas partnerships, royalties, existing trusts, Insurance policies, and real estate.

Illiquid assets have value and, in many cases, very high value, but are difficult to price and to sell.

The absence of liquidity lowers the value of the asset by the amount of an illiquidity discount. All other things being equal, the more illiquid the asset is, the less value it has. Measuring this discount and applying it in appraisal valuations of illiquid assets has always been a challenge.

A Tax-Efficient Way to Make a Charitable Difference

Many charities welcome contributions of illiquid assets. For the donor it may be an effective and tax-efficient method of giving. The donor is entitled to claim a tax deduction of the fair market value– not just the original cost basis. This tax treatment offers significant benefits at the federal level and frequently at the state and local levels as well.

Donated Property-Key Considerations

Donors should obtain a qualified independent appraisal prior to making a contribution. The IRS requires a donor to obtain a qualified appraisal for illiquid assets no earlier than 60 days before the date of the gift and no later than the due date. It is the Donor’s responsibility to obtain the appraisals, file appropriate tax returns, and defend against any challenges to claims of tax benefits.

Tax consequences are important. The donor should consult a professional tax advisor. The tax benefits of gifting the unusual (illiquid) may be substantial – and could include deducting the full fair market value of the assets, avoiding all capital gains tax, and the ability to carry forward deductions for six years. But, the devil is in the details; it must be done correctly, according to IRS rules.

Establishing “Fair Market Value” for a Promissory Note

“Fair Market Value” is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. For liquid assets trading in active markets, valuations must reflect observable price quotes, recent transactions, or primary issue prices for identical assets.

For illiquid assets, if actual prices cannot be established due to poor liquidity and lack of trading activity, an alternative approach is needed. An appraisal from a qualified appraiser should reflect “Fair Market Values” that approximate actual values from sales in a hypothetical, orderly transaction.

The appraiser must use experienced judgment; that is the key to valuing illiquid assets. There is no mathematical formula, rule-of-thumb calculation, or textbook process; it is a “Judgment Process”. It requires a sound understanding of the promissory note and its potential buyers.

Appraising the asset requires deciding the appropriate yield rate of return applicable to the note being appraised. This decision is based on its individual, unique, risk/return profile. Benchmark yield rates used for comparison should have a close relationship to current and/or historical yields for comparable assets. This means the valuation experts must have expertise and understanding across several disciplines, including trading, quantitative research, credit analysis, and structured finance.

Conclusion

Donating an illiquid asset, such as a private promissory note, can be a tax efficient plan.

The tax deductions for donating a non-cash asset, such as a promissory note, can be very valuable. The devil is in the details; it must be done correctly, according to IRS rules.

Amos Hostetter – World’s Best Traders Learned From Him

Amos Hostetter was the founder of Commodities Corporation. Located in Princeton, N.J., it became one of the most successful and influential trading entities ever. Ultimately, Goldman Sachs bought it out in 1997, so it is no more. This is where many of today’s best traders learned their craft. The list includes Ed Seykota, Michael Marcus, Bruce Kovner, Paul Tudor Jones, Louis Bacon, and others. These are some of the most successful and best traders the world has ever known.

Hostetter was a brilliant trader with rock solid trading principles. His success was astonishing up until his untimely death in 1977. I am going to share with you some of the reasons why he was so successful. What was his method? What were some of the main trading principles he implemented to get such superb trading results?

Trend following was the method that Hostetter implemented to achieve his amazing trading results. In my opinion, trend following is the most successful trading method. You can profit in up or down markets. There is no guesswork in your trading decisions. It does an excellent job of letting profits run, cutting losses short, and much more. I have been implementing the method of trend following for many years, and I will say its works exceptionally well.

To be successful trading the markets you need to follow principles that have been proven successful over a long time. Here are some of the principles Hostetter followed to amass a fortune trading the various markets.

Hostetter, a trend follower, said it is important to find a long term trend and ride it up. Stay with the trend until clear technical evidence tells you it is over. Patience is a key trait shared by most of the world’s best traders.

Money management is crucial. Hostetter believed in using stop loss orders to keep a loss small, if the market moved against him. He would also implement trailing stop losses to protect his profit as the market advanced in his favor. Stop loss orders are an excellent tool which I use on virtually every trade I make.

Hostetter believed that observation of the market gives the best tips of all. He said to follow your experience to exploit them, while only sticking to facts. It is important to do your own analysis and research. Become proficient at technical analysis. Learn the proven chart patterns, and analyze their price and volume action.

The keys to successful trading are to find a successful method that fits your personality. Trend following was perfect for Hostetter. Couple that with sound money management. Hostetter said to take care of your losses and the profits will take care of themselves. No truer words have ever been spoken in the world of trading. The world’s best traders know this well.

Global Accounting Information Systems – Some Assembly Required

Financial accounting and reporting can be challenging for many organizations, but for the world’s largest home furnishings company this proved to be especially difficult at the end of the 20th century. IKEA, the Swedish-founded global furniture giant based in the Netherlands operates 280 retail stores in 26 countries, 29 trading offices in 25 countries, and 11 distribution centers in 16 countries. IKEA also owns and operates its own industrial supplier called Swedwood, which has 5 production units in 5 countries. Add to the mix over 1000 other suppliers across 55 countries and the framework is set for a truly global organization where the potential for growth is seemingly limitless, however at the same time it creates a complex global network where accounting information can be hard to manage.

IKEA has experienced solid sales growth every year since its first store opened in Almhult, Sweden in 1958, yet the company has just recently started to grow at a rapid pace. Since 2000, annual sales have more than doubled from 9.6 million euros to 23.1 million euros in 2010. IKEA is able to achieve these results for a number of reasons, such as its strong focus on supply chain management, raw material sourcing, cost management, manufacturing efficiency and economies of scale, and company-wide culture of frugality and doing things within small means. However, despite all of these strong attributes the success of any company is highly dependent on its ability to manage cash flow and financial information so that it can make strategic business decisions and drive future growth.

One often-overlooked aspect of a company’s financial success is the quality of its accounting information systems. Because of its global nature, IKEA was forced to examine its financial system in the late 1990’s due to euro compliance regulation and the Y2K threat. Roger Neckelius, IKEA’s Chief Information Officer and other IKEA executives quickly realized that the company’s myriad of antiquated accounting systems was inadequate for their short term goals of regulatory compliance and their long-term goals of a common, streamlined system that could be used across the IKEA world.

Ulrika Martensson, the Project Manager responsible for implementation of the replacement system began her search with certain criteria that had to be met, such as having one system for all of IKEA that was flexible enough to handle the different needs of the various business units and its users. The system would have to be capable of a quick implementation, and possess the ability to grow along with the company.

Martensson got everything she wished for when IKEA decided on Coda Financials from the United Kingdom, but wasn’t quite prepared for the amount of work that was required to tailor their product to IKEA. The Coda system required that every type of financial transaction was “defined” such as payables and receivables. However, in a way this was a blessing in disguise because of IKEA’s enigmatic and complex organizational structure. As mentioned earlier, IKEA has a vertically-integrated supply chain with numerous components all over the world. But it is also a privately-held company with a unique “ownership” structure. The IKEA Group is the group of companies within IKEA that handles the core elements of the business such as product research and development, production and distribution, and retail sales. The IKEA Group has a parent company called INGKA Holding B.V., which in turn is owned by the Stichting INGKA Foundation, established by the IKEA’s founder Ingvar Kamprad. Furthermore, the Stichting INGKA Foundation funds the Stichting IKEA Foundation, a Dutch charitable organization which supports humanitarian initiatives throughout the world. Because the Coda system was customizable, it allowed for a much easier conversion process for the variety of business units within IKEA.

Martensson also took advantage of the system’s flexibility to solicit input from end users across IKEA and tailor the system to their needs. This is an ingrained part of the IKEA company culture – to work together and come to an agreement before making a decision. However, when it comes to financial information system standardization and compliance this democratic approach isn’t always ideal. Martensson admitted that she gave the users too much leeway and instead should have taken a firm stance that the users were required to adapt to.

Nonetheless, Martensson and her team made quick progress rolling out Coda to 12 countries over a 4 month period. They overcame differences in foreign banks automated payment systems, Europe’s complicated VAT system, and the complexity of IKEA’s organization itself to achieve their goal of a September 1st, 1999 go live date.

IKEA’s journey in the late 1990’s to switch over to a common financial system shows the effect of globalization and the need for companies to adapt in an ever-changing business environment. Not only did the successful implementation of CODA ensure regulatory compliance by IKEA, but it also enabled the company to be more transparent in terms of financial reporting throughout the organization. Executive management no longer had to extract information from the myriad of financial reports that existed prior to the CODA implementation; it had common information in a common format at its fingertips to help make sound decisions to secure the long term financial success of IKEA.

Increase Your Wealth With Stock Market Investment

Investing in the stock market is one of the fastest ways to maximize your returns. However, this form of investment also comes with a high level of risk. While it is common for investors to grow rich overnight with stock market investments, it is equally common to lose a lot of money in the stock market.

So then how can one leverage this investment choice without taking on too many risks? Here are a few guidelines that can help you to make the right stock market investments at the right time.

Background Research

For investors, doing background research on which companies to invest in is the key to building profits. It has been observed that first-time investors usually invest in big companies as it is considered a safer option. You can also look deeper and focus on the companies of tomorrow but you should know how to identify them. This is where background research comes in handy. You need to understand industry trends to make the most of your stock investments.

Company Health

To enjoy best returns it is advisable to invest in good companies. You can determine a company’s quality by its financial health and track record with customers and investors alike. For you to keep earning returns the company should continue to perform well in the future too.

It’s All About Timing

For success in the stock market, it is very important to invest at the right time. Making timely decisions to buy and sell stocks is the key to earning big returns.

Let Your Portfolio Evolve

Over a period of time, as companies change their strategies, you should also allow your portfolio to evolve. It is better to spread investments over a diversified portfolio to reduce risks. This is a common strategy investors use for long-term success. Never put all your eggs in one basket is indeed the golden rule for stock market investment.

Reinvest To Multiply Your Profits

One good strategy is to re-invest the profits earned from previous investments. This concept is called ‘Compounding’. As you re-invest the base of your investment grows and thus returns are higher. If you are a proactive investor and you are reinvesting profits earned then there are good chances your returns will be very good in the long-term.

Avail The Services Of An Investment Manager

If you don’t have enough know-how on stocks and trends then you can choose to hire the services of a good investment manager. If you have a good risk appetite, then you can give your investment manager some flexibility. Remember while losses are part of the investing process, a good investment advisor should be able to come up with a strategy to keep this at a minimum while maximizing your gains.

Today there is so much information available online and you can also use an online trading platform to buy and sell stocks thus making stock investments easier than ever before. Sign up with a reliable online provider and give it a shot!

Leverage Your Returns With CFD Brokers

A contract for difference popularly known as CFD is an arrangement made in futures contract through which the client and the broker make payment in cash rather than in the form of goods or securities. This type of arrangements is generally popular in forwards or futures contracts. Amount payable under a CFD agreement is nothing but the difference in the amounts while entering and exiting a contract. The agreement under a CFD contract is executed between a buyer and a seller in which the seller will pay the difference between the current price and the price at the time of making the contract. There are numerous online and offline brokers who facilitate this kind of contracts in these days.

As CFD trading happens mostly in capital markets and almost all the transactions of capital markets are digitized the brokers for CFD transactions can also be met online. There are many online CFD brokers who offer various services to both seller and buyer segment people. The services by CFD brokers can be availed by any person who is investing in shares of any kind. If you trade on equity through a CFD agreement then the contract will become an equity derivative. Likewise you can trade in any of the other major financial instruments as well as in commodity market instruments.

The CFD brokers facilitate a transaction between the buyer and seller of any derivative instrument by speculating the price movements of that particular instrument. This is not as simple as we discussed as it involves careful and clear understanding and analysis of many aspects that effects directly or indirectly the price movements of a particular share or security. Hence, a professional assistance is must for both individual and corporate entities that are planning or already involved in CFD trading.

And in the era of digitization as everything is happening online you can find a CFD broker online who can assist you in your CFD trading. There are entities that hire these professionals and offer their services both in online and offline modes and there are also people who work as individual CFD consultants. Meeting either such consultants and trading in CFD has proven to be a successful strategy for many CFD traders. Trading in CFD and taking assistance from a CFD broker is a common phenomenon in western part of the world where as in eastern world it is still in progress.

There are as many as CFD brokers available in the eastern part too but people are less aware of CFD transactions.

Begin Your Trading Career With Trading Stocks Online

Trading stocks online or online trading of stocks and shares is a common phenomenon in today’s stock trading segment. Although it is a common phenomenon around the world for few it is still a mystery. Creating an online trading account, buying and selling stocks, constantly tracking your investment is still being perceived as a herculean task by many. To get over with such perceptions the first and foremost thing you must know is to read a lot about markets and their movements. Besides reading, getting in touch with online stock brokers who have ample knowledge in the area of trading and managing stocks would be very much helpful for beginners.

After acquiring knowledge on stocks and getting in touch with online brokers it is always necessary to have ample information on stocks that you are investing. For getting enough information about various companies, their stocks and their prospectus you got to know few tips on trading stocks online. Let us look forward for few such tricks or steps which you have to follow if you are a beginner. You must start your online trading with research and analysis. Research and analyze the companies that are flourishing and the companies that are moving downwards. By this research you will be equipped with enough knowledge on stocks fluctuations and can easily identify the future prospectus of shares of respective companies. This step should be a rule of thumb for both beginners as well as for experienced online traders as this would lead them to choose the right stock.

Once you are done with research and analysis of stocks next step must be quite tedious for the beginners but cannot go further without this. You must get an idea on fundamental and technical analyses of stocks as these analyses are the sole runners of any stock market. Once you get knowledge on fundamental and technical analyses of stocks the next step is to understand the choices of an online stock broker and an investor like you. The traders choose a stock which is profitable for both the company and the client. But this should not be the case with the investors. Investor must choose a stock which is profitable and which can maximize his wealth. Knowing these differences and choosing stocks is key to your success in online stock trading. Once you are clear on the basics and concepts of stock trading creating an online trading account either with the help of an online broker or individually must be your next step.

Economic Turmoil and the Future of Brazil

For many years, Brazil has been an emerging economic hub, attracting investors from all over the world. The Brazilian economy saw an 368% increase in Gross Domestic Product growth from 2003 to 2011. In addition, Brazil took in almost half of Foreign Direct Investment flowing into South America during 2015. This doesn’t come as a surprise since it reigns as one of the major emerging national economies. However, Brazil has seen a recent economic downturn with increasing unemployment and a contracting GDP. In fact, the Brazilian government cut 2017 GDP expectations from 1.6% to 1% growth. Having been one the most lucrative foreign investments for governments to individual investors, what happened to the so-called “Country of the Future” and can Brazil regain its momentum?

Back in 2015, recession hit Brazil hard and the country is still struggling to get back on track. According to the CIA World Factbook, the economy contracted 32% from its peak in 2011 and unemployment reached a new high at 12.6% in 2016. Being based mostly on services, agriculture and oil, Brazil’s economy has a direct correlation with global demand. With global recession looming, Brazil is feeling the effects of a slow world economy.

Brazil is a top tourist destination offering beautiful beaches, a diverse culture and exciting festivals. However, with the world economy slowing down, people are less likely to travel abroad. Since the majority of the country’s GDP derives from the service industry, Brazil will not be able to rebound any time soon unless there is a major boost in consumer confidence.

The demand for Brazilian exports was slashed when its largest trading partner, China, entered into an economic slowdown of their own. The decrease in exports caused massive layoffs throughout the nation. The notorious economic downward spiral began by wary consumer spending as unemployment rose. Companies that tried to gain capital by borrowing in U.S. dollars found it difficult to pay back those loans as the Brazilian Real crashed 25% in the span of a year in 2015.

One of the major hits came from low oil prices and the corruption of Petrobras, a large oil company and Brazil’s largest source of investment. Brazil is major producer of oil, exporting $11.8 billion worth in 2015, according to the Observatory for Economic Complexity. OPEC delivered a major blow when the cartel decided not to cut oil production, causing oil futures prices to plunge. In order to cope with heavy losses, Petrobras was forced to sell off assets and halt future research and expansion plans.

As if things weren’t going poorly, Petrobras was also caught in a scandal with former Brazilian president Dilma Rousseff and other high office executives. From 2004 to 2012, the company had spent over $2 billion on bribes to politicians whom would allow the company to charge inflated prices for construction contracts. Now that the scandal has unfolded, Petrobras executives face jail time and the company as a whole is forced to pay billions in fines.

So what does the future hold for Brazil?

Although at the moment the future looks dim, there are still signs of hope Brazil can turn itself around. The Real has seemed to stabilize in 2016 and heads into 2017 with an upward trend. Moreover, experts’ GDP projections for 2018 through 2020 show promising figures that Brazil can restore pre-recession level growth.

Even more promising, U.S. companies are still showing faith in Brazil’s future. American Airlines plans to invest $100 million in an aircraft maintenance center in Sao Paulo. Brazilian Investment Partnership Minister Wellington Moreira Franco and many countries like the United States, United Kingdom, France and Japan agree there are still reasons to invest in Brazil. This should be seen as a sign of confidence that the Brazilian market will grow soundly with the support of both national and international investment.

“The World Factbook: BRAZIL.” Central Intelligence Agency. Central Intelligence Agency, 12 Jan. 2017. Web. 23 Mar. 2017.

“Brazil.” OEC – Brazil (BRA) Exports, Imports, and Trade Partners. N.p., n.d. Web. 23 Mar. 2017.