In today’s advantageous market, many business owners still leave substantial money on the table when they sell their companies – most often because they do not truly have a handle on their company’s value. For that reason, the valuation process is a true asset to the business owner and a thorough, professionally prepared valuation will assist them in:

Helping identify the key value drivers, major strengths, and more importantly, the major weaknesses of a company allowing the owner to solve both obvious and hidden problems prior to the selling process.

Determining a reasonable selling price. Many owners rely on general rules of thumb, casual advice from friends, or other similarly unreliable sources. Values determined by general multiples or rules of thumb may be too high or too low. Unless the business owner goes through the valuation process, he just will not know. If the owner’s expectation of value is too high, it will prolong the selling process until a price concession is made. If the price is too low, money is left on the table.

Fully understanding the value of the business will assist during negotiation. In this market, one can expect buyers to be sophisticated and experienced. They will conduct a rigorous analysis of the company even if the seller has not. They will look at those factors and value drivers that the owner and his advisors should consider in valuing the company, and they will use that information against the seller in negotiations if allowed.

The valuation process can be divided into 5 steps:

  1. Determining the purpose of valuation, date of value, and ownership interest being appraised
  2. Obtain and review key elements of the business which includes but is not limited to: Corporate Documents, Financial Records, Market, Key Personnel, Key Customers, Industry Trends, and Comparable Sales of Similar Companies.
  3. Determine value indications of the business and owned non-operating assets using 3 categories of valuation approaches: Asset, Market, and Income.
  4. Determine final opinion of value after consideration of all information obtained, reviewed, and analyzed and making appropriate allocations for goodwill and other intangibles the business possesses.
  5. Prepare written report

Experience
Our senior valuation analysts have experience in valuing businesses in a variety of different industries including manufacturing, distribution, retail, healthcare, banking and finance, engineering and high technology. This diverse background allows us to knowledgably undertake valuation and litigation assignments for virtually every possible business and purpose.

15 Situations When a Business Owner May Need a Valuation
Why Rules of Thumb Don’t Work

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