Business Valuation Blog | Understanding Buying / Selling a Company

What Happens when Valuation Firms Work with My Business?

Posted by Business Valuation Specialists LLC on Dec 28, 2016 1:11:00 PM

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When you need to have business valuations performed, valuation firms provide you with significant insights into your company that can give you a wide range of benefits to your business. But what happens when you're working with a valuation firm? What can you expect from a certified business appraisal specialist? Here's a quick look at what you can expect when undergoing a business valuation.

What Happens when Valuation Firms Work with My Business?

To start with, a quality business valuation company will look at much more than just the basics of your business. A business valuation is more than just a hard look at your business' financial health, it's a comprehensive look at the industry and what affects your business' ability to perform in the market. They'll take a solid look at the risks and rewards that are possible with your company and provide you with a detailed report of what your business is worth along with areas in which it is strong and other areas in which it could be improved. Here are the usual steps taken in the process:

  1. Once we're in contact with each other, the valuation specialist will gather the basic information about your business. This may include the type of business, the availability of key information, any potential issues and other ares of importance to the business valuation. The purpose of the valuation is also determined, as particular types of appraisals are required in some specific situations.
  2. Based on the initial contact, the business valuation specialist will typically provide a proposal including the timeframe expected for the initial business appraisal report and the cost expected. The appraiser will also request any necessary information for the valuation, including financial data, asset information and additional items of interest to the valuation process.
  3. Once this information has been obtained, the valuation specialist can begin to dig into the details. They'll take a look at what aspect of the industry your business falls into and what portion of the market share it holds. Beyond simple information gathering, they'll examine your business' finances, including overhead costs, regularity of income, actual value of assets and similar documentation. Your unique facets of the business will also be taken into account.
  4. Using this information, the valuation specialist will develop a business valuation report. This report is created using standardized methodologies and is designed to stand up to strong scrutiny, providing you with a report that will hold up in insurance, tax and legal circles. Once the report is prepared, it will be reviewed with you to ensure that it is an accurate reflection of your business and that any missing details are taken into account. If you are not in agreement with the valuation as presented in the initial report and can provide the additional details needed, a revised valuation report is prepared to include those details as appropriate.

To discover the valuation of a company, valuation firms provide invaluable insights into your business. By knowing the process that's involved, you can better prepare for the process and will know what to expect when a business appraisal specialist develops a valuation report for your business.

Topics: valuation firms, business valuations