Business Valuation Blog | Understanding Buying / Selling a Company

When you are looking to get your business appraised, a common concern is how much it will cost. Perhaps a more important question is what kind of return on investment will you reasonably see from the valuation effort? A business appraisal gives you a great source of insight into your company’s financial state on many levels, from determining a need to expand into new markets, hiring new employees, reducing resources in certain areas, or generally setting new goals. If you are looking to buy or sell, a business valuation is an excellent source of information that will leverage your negotiating position.

As an investment tool, business appraisals can be used to determine where your company is financially at the present moment, and what the best course of action for your business would be. If you are considering a business expansion or looking to enter into a new market, a business valuation can assist with estimating the potential risk of new investment. It will help ensure you have a more robust financial picture thereby allowing you to make more fully informed decisions about the direction your company should go.

An appraisal can assist in obtaining traditional bank financing or new partner investment. It will also help when planning an upcoming change in ownership, from a family estate perspective or a majority share buyout. Having a business valuation completed by a certified appraiser provides documentation that is accepted for legal, financial, and governmental purposes. In short, there are numerous ways a business appraisal can assist you in your long and short-term plans.

As you can see, the cost of a business appraisal is not the important part of the equation. Whatever your business plans may be, a company valuation helps ensure that you are entering the process well aware of your financial situation along with the pros and cons you may be weighing in the decision-making process. We can assure you that at Business Valuation Specialists, we will provide a certified, supportable valuation at a very reasonable cost and we look forward to the opportunity to work with you.

When an entrepreneur faces a business valuation cost is one of the first aspects that comes into play. However, it should actually be one of the last considerations when getting a quality business appraisal performed. Why? Business valuations provide companies with the information they need to boost profitability and improve operations. Here's why getting a business valuation is one of the smartest ways you can invest in your company.

Why Business Valuation Cost is the Best Money You Can Invest

If you're curious about how a business valuation can help you improve your company's profitability, you're not alone. When a business appraisal is performed, a professional appraiser spends significant time studying not only your company's finances, but also its assets, operations and practices. Because a professional appraiser spends their days looking at how businesses operate, they have a much better idea of how your company compares to other companies it has appraised over the past few months. They'll then prepare a report that reflects their findings which you can put to use to your company's benefit.

From this level of experience comes any number of valuable insights. Is your business ahead or behind in terms of digitization? Are all the other businesses in your industry in a slump or just the ones in your region? Do you have a unique research and development process that adds to your company's overall value? Do you have undervalued assets that you could bring to bear and leverage to grow your company? Though these topics can seem unconnected to your company's overall value, they actually play an important role in determining that figure.

You can also use your financial data to discover where your company can go from here. What about accounts receivable or payable? Is it normal to have over 10% of invoices still due after 30 days in your industry? Have you completely depreciated equipment and assets that actually still hold significant value? How will the recent change in land and real estate values in your area impact your company's overall value? Is your overhead too high compared to other businesses of your type in the area?

Where you take your business after the report is generated is up to you. Among the areas the business valuation report will cover includes information on your internal functioning, how your business compares to other businesses in your region, the condition of your industry as a whole and similar aspects. With this information, you can quickly take advantage of market conditions, gain a better understanding of your business' overall value and make improvements to boost that value. By using this information, you can leverage new found equity to expand your operations, diversify into other areas of your industry that are opening up or solidify your operation to provide years of reliable income. Compared to the benefit of actions you can take with the information provided in an appraisal report, the original cost is actually quite low.

Though business valuation cost can initially seem high, the information and insights it provides into your business' daily operations and overall business plan makes it an excellent investment in your company's future. If you're considering having an appraisal performed on your company, make sure you're working with a certified business valuation specialist to ensure you'll receive a report that provides an accurate picture of your business, using standardized methodologies that have been proven over time.

When you're trying to get a company valuation, a common question is with regard to the business valuation cost, but the more important question is what kind of return on investment can you get from that business valuation cost? The valuation of a company gives you a great source of insight into your business' financial state, from determining whether you need to expand or try taking a new direction to keep your business moving. Let's take a look at the benefits business valuations have on companies.

How Much Does a Business Valuation Cost?

As an investment tool, business appraisals can be used to determine where your company is at financially in the present moment, with a clear financial picture to determine what the best course of action is for your business. But it can also be used to help you figure out where your business is going and what kind of returns you can see within a particular time period. It can even be used in a couple different ways based on whether the income from your business is regular or irregular.

If you're considering a business expansion or trying to grow your business into a new market, do you know whether it's a good investment or a risky proposition? A business valuation ensures you have a better financial picture, so you know whether your assets have been understated because of full depreciation of your company's assets that are still in use or overstated because your accounting isn't being properly categorized. This means that you can make intelligent decisions about which direction your company should go.

When you're getting ready to buy or sell a company, knowing the actual valuation of a company can help you at the negotiating table. If a company's value is overstated, a company valuation helps you bring the owner down to a more reasonable price. On the reverse, if you're selling a company it will help you back up your asking price, ensuring you get a better offer on your business. In either instance, getting a quality business appraisal will help provide the documentation you need to pursue financing to make the purchase.

Are you getting ready to pass your company on to the next generation? When you're gifting your business or otherwise need to provide documentation for a change in ownership, having a business valuation from a Certified Valuation Analyst provides documentation that is accepted for legal, financial and government purposes. That helps ensure that your gift will be exactly what you want instead of causing the burden of proof or legal problems because of an incorrect statement of value to shift to the very ones for whom you're trying to pass on a legacy.

As you can see, the cost of a business valuation isn't the important part of the equation, it's what you do with it. Whatever your business plans, a company valuation helps ensure that you're entering the process well aware of your company's exact situation and any risk you may be creating for your business. Our appraisers are certified by the National Association of Certified Valuators and Analysts. That means you'll get a quality business appraisal that is recognized by government agencies, financial institutions and insurance companies. Please contact us for more information or to schedule an appointment with our business valuation specialists.