By: Kristen G. Abraham

Vice President & Appraiser

Many small and large businesses have already begun to feel the impact of the BP Deepwater Horizon Oil Spill in the coastal Gulf State regions.  The impact that this disaster will have on local and global economies and how long it will last is not yet understood.  However, one thing that is for sure is the financial consequences for the communities affected will be substantial.  A certified evaluation of a company’s loss due to this disaster could help in placing a numerical value and recovery of this loss in income. 

Declining activity has been shown in the following industries:  commercial fishing, recreational/tourism, oyster and seafood processing, BP pipe and fittings suppliers, and numerous others.  Sean Snaith, an economist at the University of Central Florida, recently completed a study showing that Florida’s gulf coast could lose 195,000 jobs and $11 billion this year alone if the spill cuts tourism in half. 

The value of a company is usually dependent upon its past, present and future earnings or its ability to generate income.  A knowledgeable and prospective buyer of a business will estimate (as best he or she can) what earnings will be generated in the future. The buyer “buys” the business based on both the value of the hard assets (accounts receivable, equipment, and inventory) “plus” the goodwill it has generated. Goodwill is generally defined as the salable value of a business arising as a result of name, reputation, customer loyalty, location, products, and similar factors.