Business Valuation Blog | Understanding Buying / Selling a Company

Valuing an Industrial Company to Create Growth

Posted by Business Valuation Specialists LLC on Oct 19, 2016 9:30:00 AM

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When you're running a business, it can seem really difficult to determine how to build growth into your company. One of the easiest ways to do this is by valuing an industrial company to determine where it's strong and weak, what insights you can pick up and similar aspects. A often ignored option, business valuations help you figure out where to improve, where to invest and which areas you're doing great in. Here's more information on the benefits of business appraisals when you need to get your company operating efficiently again.

Valuing an Industrial Company to Create Growth

May people are under the misconception that business appraisals are only for when you're buying or selling a business. They're often surprised at the depth of information provided in a business valuation report. Do you have multiple locations in similar areas that behave completely differently? Are you trying to figure out how to improve production or profitability? Are you wondering what your business is really worth, whether you're considering selling or not? These are all excellent reasons to have a business appraisal performed.

Many business owners rely too much on their tax accounting records. But tax accounting reflects standardized tables, figures and values. The only way to know whether your business is average or not is by having a business appraisal performed.

A business appraiser who has experience in the industry may be able to offer insights into not only why the business is underperforming, but may be able to tell you how to improve operations. They can make suggestions about how to draw a different crowd to that location to make up the difference.

Some business owners make the mistake of basing their business value on what similar businesses have sold for. While this is in fact one way to value a company, business owners often don't understand how the multiples work and apply them to the wrong numbers leading to an inaccurate assessment. They can be very far off using rules of thumbs or multiples heard at the country club. Differences in income or overhead can also make a big difference. 

Speaking of income and overhead, a good business valuation specialist can tell you where your company excels, where it measures up and where it needs improvement. Maybe instead of taking a risk with that expansion, you really need to upgrade to more efficient equipment. It could be that your company provides phenomenal features in your products, but the market perception is that they don't last long. Any of these reasons can affect your bottom line.

By keeping these benefits in mind, you'll be able to very quickly use the valuation of a company to determine a smart course of action. If you need help valuing an industrial company, a certified business valuation specialist is the best way to go, as they use standardized methodologies in their reports.

Tags: Valuing an Industrial Company, business appraisers

What to Look for in Quality Business Valuation Services

Posted by Business Valuation Specialists LLC on Aug 24, 2016 11:30:00 AM

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When you are looking at having the valuation of a company determined, business valuation services are one of the most common places to investigate having the business appraisals done. But how can you tell whether the business valuation services you're investigating are able to do the company valuation effectively , efficiently and accurately? Here are some tips on what to look for in quality business valuations companies:

What to look for in quality business valuation services

  • Certifications: Do the business appraisers have certifications from the American Society of Appraisers, American Institute of Certified Public Accountants, National Association of Business Certified Valuation Analysts or Institute of Business Appraisers? These accreditation organizations have been set up to ensure that business appraisals are being performed in a uniform fashion using the methodology that best applies to that situation.
  • Business History: How long has the company been in business? You don't want to trust your company valuation process and your company's private records to a company that may not know what they're doing or may expose your company's data to any number of outside interests. A company that has a proven track record can get the job done right without a lot of changes needing to be made. One exception is a newer company that has proven professionals with significant experience behind them, but even then, you should be aware of the potential risk.
  • References: Any service providing the valuation of a company should be able to provide you with references from satisfied clients. If the company is unable or unwilling to provide these references, it's probably because they have poor customer service or have unhappy clients.
  • An Appeal Process: What happens if you feel the company valuation provided is inaccurate or didn't use the correct information when calculating the valuation of a company? Because company appraisal can be a somewhat fluid process, most company appraisal services offer an appeal process to ensure that the business appraisal provided is an accurate representation of your company.
  • Knowledge of Several Approaches: Business appraisal is not a one-size-fits-all process. Depending on your specific needs, there may be a need for one of several different potential options when valuing your business. A quality business appraiser knows not only the several different approaches available, but will also know exactly which one provides the best possible fit for your company and exact situation.
  • Availability and Approachability: Though part of the process of hiring a professional business appraiser means trusting them to get the job done, that doesn't mean you shouldn't be able to speak with them on areas of concern. Is the company appraiser available for consultation? Just as important, do they seem approachable if there is a problem? An appraiser who isn't willing to help explain their approach will leave you confused and wondering how accurate the final report will be.

Now that you know what to look for, it's time for action.

Tags: business appraisers, business valuation services