Having a company appraisal performed can seem like a simple task, but it's actually much more complex than it first appears. Though you may see the beginning and end result, you're probably not aware of the many tasks that take place in the middle to ensure that you're going to get the most accurate, reliable business appraisal that you can possibly expect. But what exactly takes place behind the scenes and how does it impact the final valuation report that you receive from your appraiser? Here's a quick look at the process from beginning to end to help get you started.
What goes on behind the scenes at business valuation companies?
- Intake: However you get to the particular business appraisal firm that you're now speaking to, it's of vital importance that you're routed to the correct appraisal specialist. You may be asked several questions about your company's business, its size and the reason you're getting the appraisal performed. This all happens to ensure that you're sent to the appraiser with the best experience and track record for your specific needs. A quality business valuation firm will have experience in the trenches, not just determining value by the book.
- Initial Information Gathering: Though you'll have answered some questions, there are probably many more waiting to be asked. Why? The type of appraisal you receive is, in some cases, dictated by law. This is to ensure that in some high-stress situations, everyone is treated fairly. The appraiser will also ask about your competitors, your position in the market as you see it and the overall market conditions to get an idea of how you view these factors that can impact your company's value. A solid look at your finances will probably take place at this time.
- Research: Next, the appraiser goes into independent research mode. They take the time to look at your industry, the market, your company's specific strengths and weaknesses, its reputation in the community and industry, how it fares against competitors in a completely sterile setting and how it's doing in the market as a whole. This may also include a site visit where the appraiser takes a good, solid look around your entire business, finding areas where it's performing well compared to the competition and areas where it may need improvement.
- Report Preparation: The valuation specialist will now take a significant amount of time to calculate the company valuation and prepare a well-researched appraisal report that follows standardized methodologies to develop a final value for your company, This will include a wide range of information to ensure its accuracy. At this time, the appraiser may have another valuation specialist take a look at the report to ensure accuracy and will work with you on any concerns you have about inaccurate values included in the report.
When you have a solid grasp of not only what happens during a business appraisal but also what happens behind the scenes at business valuation companies, you walk away with a much more solid grasp of how those companies work and what to expect from the process. This makes it much easier for you to appreciate the work that goes on to provide you with a solid valuation report on your business and the level of accuracy and integrity that you should come to expect.