Business Valuation Blog | Understanding Buying / Selling a Company

Should You Appraise Your Prepared Food Delivery Service Business? Yes!

Posted by Business Valuation Specialists LLC on Sep 14, 2020 8:00:00 AM

subscription food delivery business appraisal

With online food shopping and ordering on the rise and the demand for organic, ethically-sourced, vegan, gluten-free or paleo, the prepared food delivery service industry has emerged as a fast growing business segment. Consumers are turning to these business for a reasons that go beyond just convenience. They have become a way to try new cuisines and dietary options without compromising taste or ingredients in the comfort of their homes. For those interested in entering this market, growing their operation or looking to take advantage by selling, the importance of obtaining a current business appraisal cannot be understated.

Knowing the financial value of a prepared food delivery service business provides you with a basis for marketing the operation, securing bank financing or investor equity to expand, gain a better perspective when offering to purchase, or add leverage in a sale, where value credibility is critical in decision making. You will be better prepared to make key decisions with confidence.

A certified business appraiser, like those at Business Valuation Specialists, will go over your company's finances, look at competitors, consider market forces and a wide range of other information to determine an overall value. This information all feeds into an analysis that will arrive at a fair and accurate valuation of your business. The appraisal will be supportable and stand up to scrutiny. 

By working with one of our certified business appraisers, you will receive a comprehensive report that will give you the necessary tools to accomplish whatever goals you have in the future. Throughout the process, you will also gain a better understanding of your company's strengths, weaknesses and what risks may be worth taking. 

Tags: valuing a business, Food Delivery Service Appraisal, prepared food

Valuing your Business in the Midst of Uncertain Economic Times

Posted by Business Valuation Specialists LLC on Aug 31, 2020 8:00:00 AM

Business Valuation makes planning and choices easier

With all the craziness that 2020 has brought along with it, from COVID-19 to civil unrest, to wildfires and storms causing broad power outages, one way of counteracting the uncertainty of your company’s future is to have an updated business valuation completed which not only focuses on historic performance but projected outcomes as well.

Working with you and your company’s key personnel, the certified appraisers at Business Valuation Specialists will walk you through the process and provide insight as to the key information needed to analyze the value of your company with past, present and future scenarios considered.

You may want to consider selling in the current market, capitalize on buying a business which needs further examination, or reaching out to new investors and financial institutions who can provide the necessary capital to get you through these tumultuous times. Regardless of the reasons why, it is always a smart decision to obtain an independent valuation which will hold up to the scrutiny of the parties involved in the transaction.

The experienced, certified appraisers at Business Valuation Specialists are ready to discuss the next steps with you. We look forward to the opportunity to work with your business as you continue to wade through these difficult times.

Tags: business appraisal, Business Valuation Specialists, Economic Environment

Why Do You Need A Business Appraisal?

Posted by Business Valuation Specialists LLC on Aug 17, 2020 8:00:00 AM

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Whether your company is expanding or going through a downturn, being purchased or sold, audited or invested in, refinanced or liquidated, it is important to understand the real market value of your business for you, your partners, employees and key third parties involved with your operation.

Obtaining a business valuation from a qualified appraisal firm such as Business Valuation Specialists can provide you with firsthand knowledge of the value of your company and what to expect should you wish to buy, sell, refinance or bring in new investors. A formal appraisal analysis and report can assist you in any number of ways as you move through the next phases of your company’s development and can be shared with third parties who may be assisting you with these project plans.

We will work closely with you to determine the critical information needed to complete the valuation analysis and answer any questions you may regarding the process. The experienced, certified appraisers at Business Valuation Specialists are ready to discuss the next steps with you. We look forward to the opportunity to work with you and your business as a key component to your ongoing business projects.

Tags: business apppraisal, Business Valuation Specialists

How Does Valuation Consulting with Accounting Firms Work?

Posted by Business Valuation Specialists LLC on Aug 3, 2020 8:00:00 AM

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There are a number of situations when accounting firms will call in a valuation consultant to help determine value. Typically used for finalizing financial statements tax filings or dealing with IRS audits, valuation consulting with accounting firms is a process that is often misunderstood, primarily because it is only used in very specific circumstances. If you're facing this situation, here's a bit more information to help you understand what's going on in the process.

How Does Valuation Consulting with Accounting Firms Work?

Let's start by taking a look at the differences between certified business appraisers and accounting firms. Accounting firms provide ongoing support to companies in terms of bookkeeping and financial records, including required reporting. This gives the business an easy way to quickly determine where the business is at the moment, but doesn't tend to provide deeper details about how the company is running in terms of efficiency and operations. By comparison, a business valuation takes an in-depth look at how the company is doing at a specific moment in time, not only in terms of finances, but also in terms of market demand, operational efficiency, financial issues such as boom years or high expenses, projected future income and a wide range of other variables that you won't find in most accounting documents.

Though many business owners choose to limit their use of business valuations to points when a business is being bought or sold, it does have value in a range of other circumstances. When faced with an IRS audit or if you're turning in tax paperwork that is more likely to be audited, having a valuation consultation on your business helps ensure that everything is ready to go before the process. Similarly, before financial filings are made, having a business appraiser look over the business value with your accounting firm helps ensure that no mistakes are made and that your company is properly valued in the filing process.

In some situations, a company's accounting firm may need to work directly with a business appraiser to ensure that the appraisal data is conforming to the accounting and tax requirements of the business' specific structure and organization. As with any business valuation, there is a period once the valuation report has been completed during which a thorough review allows for amendments to be made to the report, if specific issues arise, but for the most part, working directly with the accounting firm or department helps eliminate many of these issues before they arise, which is why they are more common during consultations due to the complexity of finalizing financial statements or working with tax agencies.

By having a better idea of what happens when valuation consulting with accounting firms needs to happen to sort out a specific tax or financial situation, you'll be better able to deal with any questions that may arise during the process. However, it's important to make sure that your accounting firm is working with a certified business appraiser in these situations. This is because a certified appraiser has gone through specific training to ensure that they're using time-tested methodologies in their calculations. These methodologies have been used in a wide range of circumstances, including financial and tax agency situations, which helps ensure that you'll get a proper accounting of your business value.

Tags: Valuation Consulting with Accounting Firms

How Does an Electric Utility Company Appraisal Take Place?

Posted by Business Valuation Specialists LLC on Jul 20, 2020 8:00:00 AM

high voltage substation

When your business is keeping the power on for your customers, the value of your electric utility company may not seem important. However, that value can make a huge difference in how easily you can grow your business, whether it's through a merger or simple expansion as your region becomes more populated. But how do you determine the overall value of your utility? An electric utility company appraisal can go a long way to giving you a solid grasp of your business' value. Here's what happens in the process.

How Does an Electric Utility Company Appraisal Take Place?

Let's start by taking a look at the kind of factors that can impact your electric utility's value. How many of your customers pay on time with their payments versus those who are behind? This can have a strong impact on your cash flow. What's the size of your customer base and is it growing or shrinking? If the population in your area is growing, you may end up seeing more apartment and commercial customers, which can grow your business. What condition are your utility's assets in? If you replaced all of your transformers in the past few years following a major disaster, they'll have a higher value than those that will need to be replaced soon.

This information is among the data that a certified business appraiser will consider when they're calculating the estimated value of your electric utility company. They'll take this kind of information into account, as well as looking at your company's financial state, competition and similar factors that can impact your ability to compete in the market.

To start, the appraiser will gather information about why you need the appraisal performed and your finances. This allows them to determine the best methodology to use in your circumstances. In many situations, there are legal precedents that require the appraiser to follow a specific method when calculating your company's business. As they look at your finances, they'll look for unusual transactions, such as the huge expenses you had the year that the hurricane wiped out 90% of your infrastructure or the year you gained several large box stores as customers who paid for their own infrastructure upgrades.

Once the finances have been sorted, the appraiser will look at the competition, local market and expected future changes to your business to help estimate the value. They may also look at information from publicly-traded electric utility companies that have similar revenue, receipts or transactions to yours to determine value. Income can be projected out into the future to calculate value as well. In almost all situations, the value of an electric utility company is more than the simple value of its assets.

By having an electric utility company appraisal performed on your business, you can use the information and insights you gain to improve your company's overall operation, making it work more efficiently and grow responsibly. However, it's very important that you use a certified business appraiser for the valuation process. The certification process teaches specific methodologies to use in a range of circumstances, allowing the appraiser to provide you with the most accurate estimate of your company's value.

Tags: utility company business appraisal

How is a Private Medical Practice Valuation Different From Other Business Valuations?

Posted by Business Valuation Specialists LLC on Jul 6, 2020 8:00:00 AM

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When you're actively working in a private clinic, your days are filled with your patients and their many concerns. But beyond the value that you bring to your patients and their families on a daily basis, what's the value of your practice? If you're not sure, you're not alone. Private medical practice valuation is an exceptional tool that works well to provide you with in-depth details about your business, making it easier to make solid strategic decisions for your company. But how is this type of valuation different than other business valuation types? Here's a quick look at the process to help you get started.

How is a Private Medical Practice Valuation Different From Other Business Valuations?

There are a number of factors that impact your private medical practice's overall value. To start, what is your company's reputation in the community? If your business has a reputation for exceptional patient care, unique approaches to treatment or being able to provide at-home care for patients, these types of factors can greatly increase your company's bottom line. Why? This type of treatment is often sought out by those who want to make sure their family is well-cared for, to seek out treatments that are not commonly offered or to avoid having to move a sick child to have an evaluation and treatment plan developed.

What about the people who make your private medical practice exceptional? If you have top-performing doctors and nurses, you'll often have a larger following and will have people flock to your practice to receive treatment from these individuals. By comparison, if you have poorly-performing staff, patients may be reluctant to seek treatment at your facility, lowering your company's overall value due to lower demand.

Are you in a rural or urban area? Specialist medical practices in urban areas are often worth more than a general practice in a rural area, partially due to the availability of local patients as well as the demand for specialty treatments. However, many rural private medical practices have lower expenses and may have a devoted following, especially if the main practitioners have been a part of the community for many years.

How up-to-date are your practice's assets? If you have out-of-date equipment or are unable to keep up with changes in technology due to budgetary constraints, patients may seek care elsewhere to receive more exacting imaging and test results. However, if the race to have the latest and greatest equipment has put your practice into debt, that may result in a lower overall business value.

By having a private medical practice valuation performed on your company, you can rest assured that you have the details you need to make smart business decisions, whether that involves selling your practice, passing it on to the next generation, entering negotiations with a larger healthcare business, secure financing for expansion or many other purposes. However, you'll want to make sure that you're working with a certified business appraiser who has experience working with standardized methodologies to estimate your business' overall value.

Tags: Business Appraiser

What Are My Options During a Landscaping Business Appraisal?

Posted by Business Valuation Specialists LLC on Jun 22, 2020 8:00:00 AM

High angle view of wide stone path with S-curve in formal garden

When your business involves the great outdoors, planting and nurturing the earth in a landscaping company, the value of your business may seem ambiguous at best. How do you determine the value of your company? A landscaping business appraisal can help, but to fully understand the appraisal report you'll receive it's important to understand the different approaches to appraising your landscaping company. Here's a quick summary to help get you started.

What Are My Options During a Landscaping Business Appraisal?

Asset-Based Appraisal

An asset-based appraisal looks specifically at the value of your company's assets: lawnmowers, real estate, vehicles and similar assets. It's based on the idea that a smart buyer will only pay what the company's assets are worth, but it misses out on a lot of other areas, such as the goodwill you've developed in the community, future income or the market value of your business. This is why this type of appraisal is usually only used by companies that are failing or facing insolvency, because a business outside of these conditions will have some additional value that needs to be carefully considered during a sale, transfer or merger.

Income-Based Appraisal

Because so much of your company's income is based on the services you provide, an income-based appraisal may make a lot more sense for your business. This type of approach looks at your company's income for the past several years and projects it out into the future. At that point, the value of your future business income is estimated to help determine the company's value. This approach uses a couple of different methods, one of which, capitalization of earnings, is based on regular income and the other, discounted earnings, which is based on irregular income or business growth. In either situation, the appraiser will take into account any unusually high income or expenses, such as a large project or replacing an unusually high amount of equipment, and will provide a journal adjustment entry to normalize the unusual income or expense.

Market-Based Appraisal

If your business has been very successful in the recent past and there's a lot of demand for your company's services well into the future, an interested buyer may be willing to pay more because of anticipated high future growth. This market-based approach can use a wide range of factors, but will often base the value on a similar publicly-traded company's value. Because publicly-traded businesses have to file financial information, it's easy for the appraiser to match your company's transactions, discretionary earnings or revenue multiples to one of these companies and then make small adjustments to the figures to reflect your privately-held company's expected market value. This substitution provides solid, publicly-available information to back up the estamted value of your business.

By understanding the approaches used in a landscaping business appraisal, you can make better use of the information you'll find in the appraisal report provided to you by your appraiser. However, it's important to only work with a certified business appraiser, who can provide you with an estimate of value for your company that is based on sound, time-tested appraisal practices and methodologies. Make sure to ask your appraiser about their certification, because a certified business appraiser will always be happy to discuss these details with you.

Tags: Business Appraiser

How Does a Congregate Living Business Appraisal Work?

Posted by Business Valuation Specialists LLC on Jun 8, 2020 8:00:00 AM

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Whether you're creating an intentional community for families or an independent living apartment complex, knowing the value of your community can help you leverage that value for future expansions and improvements in your business. But how exactly do you calculate the value of your community? One way to get an accurate estimate of your community's value is through a congregate living business appraisal. But how does this type of business valuation work and what are the benefits you'll realize at the end of the process? Here's a quick look at how the overall process will go.

How Does a Congregate Living Business Appraisal Work?

As our world gets more and more connected, many people yearn for community and strong neighborhoods, while retiring seniors want a home where they can still enjoy their independence without feeling alone. Though many people focus on the congregate living community, the business behind it is just as important, with a great deal of forethought going into planning and activities to keep the community at the heart of the business thriving.

Knowing the financial value of that community provides your business with a basis for securing financing when it's time to expand, to fight bad tax assessments, to prove value for insurance claims and a wide range of other situations. It makes it easier to make smart decisions when you're considering making expansions to your community or getting into a different business model. The information helps you find places to improve your business, making it easier to make intelligent changes to your business.

The certified business appraiser will go over your company's finances, look at competitors, consider market forces and a wide range of other information to determine the overall value for your business. This information all feeds into a series of complex calculations that will arrive at a fair and accurate value of your business. An independent certified business appraiser will utilize accepted methodologies and approaches to value your business, whether the purpose is for potential purchase/sale, insurance, legal, financial or tax situations. The estimated value is supportable and will stand up to scrutiny.

Once this information has been fed into the appraiser's formulas, the research and analysis completed by the appraiser is then summarized in a certified report which can be presented to any third parties involved in the ongoing transaction as a supportable independent document. You can use the data within the report to spot areas where your business model is soft, where your community could be improved and a range of other purposes to help you build and grow your company. Many business owners use insights found within a business appraisal report for this purpose.

By understanding how a congregate living business appraisal works, you can get a better grasp on the overall value of your community, providing you with a solid tool for growth, improvement and expansion. However, it's of vital importance that you only work with a certified business appraiser through the process. By doing so, the valuation report you'll receive will have an estimated value that was calculated using standardized methodologies, providing you with a solid starting point for your business' future growth.

Tags: Congregate Living Facility Business Appraisal

How Does the Appraisal of a Recording Company Business Work?

Posted by Business Valuation Specialists LLC on May 25, 2020 8:00:00 AM

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When you spend your work life in the creative process, surrounded by mixers, musicians, sound and instrumentation, the value of your business may be the furthest thing from your mind. But that value can make a huge difference to your taxes, prospects for future financing, insurance claims and similar areas of interest. One of the easiest ways to prove that value is through a business valuation. But what happens during the appraisal of recording company business values? Here's a quick look at the inside track on how this process happens.

How Does the Appraisal of a Recording Company Business Work?

Like many industries, the recording industry can have its ups and downs that can impact an individual business' value, as well as a wide range of other aspects that impact value. For that reason, it's of vital importance that you work with an experienced professsional business appraiser who understands the nuances of your industry and its related values. This ensures that they're taking more into account than the simple value of your equipment, property and other business assets, to include income potential, market forces and similar aspect.

The business appraiser will start by gathering some basic information on your business. This may include the type of work you do with the community at large that can build intangible assets, such as goodwill. They may ask about your competitors and areas where your business stands out in the market. Once they've gathered some basic information, they'll continue to do research on your company.

Next, they'll look over your company's finances. Do you have a lot of bad debt that could be handled otherwise? Did you have a really huge project or huge investment one year that is throwing off the income projections for surrounding years that will require an adjustment? The business valuation specialist will look at this information and provide you with a journal adjustment, if necessary, to normalize income around those types of events.

Your company's position in the marketplace also requires some level of consideration. Do you have a reputation for being absolutely stellar at specific types of music or recording? Do you have people on staff who bring in business due to their fame, experience or expertise? Have you developed certain techniques to improve the recording process and limit studio time? Any of these aspects can impact your company's overall value and should be taken into consideration during the process.

By having a better understading of how the appraisal of recording company business values are undertaken, you'll be in a better position to leverage that information to your company's benefit, making it easier to make smart decisions for your business while lowering your overall risk during periods of growth. However, it's of vital importance that you choose to work with an accredited business valuation specialist during this time, as they will be an independent third party that will provide an unbiased estimate of your business' overall value. If the appraiser you're considering working with is reluctant to discuss their education and accreditation, strongly consider finding another business valuation specialist to help you through the process.
 

Tags: Recording Company Business Appraisal

What's Considered When Appraising a Pet Products Store Chain?

Posted by Business Valuation Specialists LLC on May 11, 2020 8:00:00 AM

Happy couple taking their beautiful dog to the vet

When you work with pet products in a chain store as your business, you're probably focused on market trends, issues with suppliers and ensuring top-quality products for your customers. But have you thought about what's involved when appraising a pet products store chain? There are several aspects of your business that you may not have considered important that are actually vital to the appraisal process. Here's a quick look at what factors are considered when your pet products store chain is being appraised.

 

What's Considered When Appraising a Pet Products Store Chain?

  • Finances. What shape are your business' finances in? Are you bringing in plenty of money with a good rate of profitability? Are you struggling to make ends meet in some areas? Have you had good years and bad years? A business valuation specialist will look at all of this information and determine whether journal adjustments need to be made to normalize unusual activity or show a more steady income stream.
  • Market. Is your part of the market expanding or shrinking? If you've specialized in a specific type of animal that are declining or increasing in popularity, that change in the market will be reflected in your business' value. If you provide more generalized products for pets that cover a wider range of species, you may find you're more insulated from market conditions.
  • Income. Do you have steady income or does it fluctuate seasonally? If you specialize in equipment for hunting dogs, for example, you may have peaks just before hunting season to account for. An accredited business valuation specialist will know how to account for changes in income, with several methods to help project income into the future as one means of determining business value.
  • Specialization. Is your business known for innovative advances, such as developing pet products that cater to animals with health conditions? Or are you just one of many businesses that do the same basic thing as everyone else, making it hard to stand out from the crowd? Being a leader with a known brand in the pet community can have a big impact on your company's value.
  • Goodwill. Do you regular provide free products to charitable organizations, such as paying for training for service animals, providing food and toys to animal shelters or helping low-income families keep their pets while going through hard times? Whatever your specific area is, these type of actions build goodwill in your business, increasing your business' market share with intangible assets that must be accounted for.

By having a better grasp of the factors involved when appraising a pet products store chain, you can make better use of the appraisal report you'll receive at the end of the process. This puts you in a better position to make positive change in your business, whether it's ensuring a better sale price when you retire, getting a better deal when you need a business loan to open new locations, work with a tax agency that has incorrectly assessed your business' value and countless other situations. However, the appraisal report can only be used if it stands up to strong scrutiny, something which you're assured of when you work with an accredited business valuation specialist.

Tags: Pet Products Store Chain Business Valuation