Business Valuation Blog | Understanding Buying / Selling a Company

What Happens During a Project Management Business Appraisal?

Posted by Business Valuation Specialists LLC on Mar 30, 2020 8:00:00 AM

Portrait of construction manager using walkie-talkie

When your business is keeping construction projects rolling smoothly, you're often too tied up in the latest issues to notice your company's value. But being able to leverage that value for growth, marketing and hiring the right people can make all the difference between keeping your business moving and losing your investment. Project management business appraisal can help you understand your company's value, how to increase it and where it needs work, but what happens during the process can often seem confusing. Here's a quick look at the entire appraisal process to help you gain a better understanding of how business valuation in project management companies works.


What Happens During a Project Management Business Appraisal?

When you call a business appraisal company, you're asked for specific information, some of which may not make much sense to you at the time. You provide that information and within a relatively short period of time using calculations that leave you scratching your head, you're presented with a valuation report that tells you what the value of your business should be. Though this is how many people approach the business appraisal process, it leaves a lot to be desired in terms of understanding the nuances of your final valuation report.

To start, when you have your initial phone call with a business appraiser, they'll ask several questions about your business. How many people do you employ? How many projects do you run at a time? What do your business finances look like? What condition are your assets in? All of this information helps the appraiser get an overview of your business so they know what to look into to calculate your company's estimated value to a very fine degree.

Next, the appraiser will probably ask for several financial statements and documents. They'll pour over this information with a fine-toothed comb. When the tornado came through town and wiped out half of your construction trailers, that unusual expense had a strong impact on your company's income that year, an impact that can decrease your company's value if it isn't accounted for with an adjusted financial statement. The appraiser can take issues like that or unusually high levels of income and normalize them through an adjustment to your books. This allows them to calculate your company's value based on your average income and growth.

The appraiser may also look at your competition, both regionally and across the country. Part of the reason for this is another type of value calculation, which looks at the selling price of similar companies and adjusts that price to your company's income, receipts, transactions or similar information to determine value.

Your days may be filled with handling issues and making sure your projects stay on track, but a project management business appraisal helps you keep track of your own business and ensures it doesn't fall by the wayside in all of the chaos. To get the best results, you should always work with an accredited business valuation specialist. The methodologies they use in calculating your business' value ensures that you'll receive an accurate estimate of that value. Don't be afraid to ask your appraiser about their credentials, because it's an important part of the process that ensures your valuation report will hold up to strong scrutiny in a wide range of circumstances.

Tags: Project Management Business Valuation