Business Valuation Blog | Understanding Buying / Selling a Company

How does a business valuation certification provide you with a better appraisal?

Posted by Business Valuation Specialists LLC on May 1, 2018 3:07:00 PM

When you need to have your company appraised, business valuation certification can be the furthest thing from your mind. However, it's a very important thing to check before you hire a business appraisal to ensure that the appraisal they provide you with will meet particular standards and hold up to strong scrutiny in a wide range of circumstances. But beyond that, why will using a certified business valuation process help provide your company with strong benefits? Here's a quick look to help get you started.

How does a business valuation certification provide you with a better appraisal?

When you make sure that you use a certified appraisal process, it helps ensure that the final value is accurate and calculated based on solid facts. During the process, a trained, experienced appraisal professional takes the time to study a wide range of aspects about your company, industry and market. This ensures that the value that is calculated for the appraisal report takes all reasonable aspects of the company's value into account. 

For example, if your company has been having strong growth, but is not remaining innovative within your industry or the market is failing rapidly, that will impact your company's overall value. An excellent example of this is the changes that oil companies have seen over the past few years. Petroleum-based companies can quickly go from running at a profit to running in the red as oil prices shift on the market. When prices drop and the industry slows down, a company that had a great value during boom times may suddenly find itself virtually worthless.

Fortunately, the depth of information and insight available in a business valuation can provide you with the tools you need to help bring your company through troubled waters successfully. It helps you improve the value of your business so that if you're working on an exit strategy, you can maximize your profit from the sale or transfer of your company. But exactly how do you take advantage of the information in the valuation report?

Because a valuation looks at your company as well as the competition, the report may mention where your business is different, both for good as well as for bad. It can look at the state of your equipment and determine whether you're going to need to replace that machinery in the near future or whether it will perform well for new owners for years to come. It determines the value of your reputation in the community, your innovative processes and the strength of your brand.

It can also look at your internal situation. If you have areas where you're increasing your overhead and lowering profitability, learning about those areas from a valuation report gives you the opportunity to make changes to those aspects. This can very quickly increase your profitability and cut your expenses, making it much easier to quickly make gains on your final sale price.

By using business valuation certification when having your company appraised, you can rest assured that the money you spend on the appraisal will be well invested. A certified appraisal ensures that the valuation will hold up well to strong scrutiny and will have accurate information on a wide range of potential issues for your business. This means you can depend on it when making important decisions about your company both now and in the future. 

Topics: business valuation certification