Business Valuation Blog | Understanding Buying / Selling a Company

What can you do with a business valuation report?

Posted by Business Valuation Specialists LLC on Feb 28, 2018 1:51:00 PM

Though it's common to get a business valuation report when you're buying or selling a company, the type of information contained in a valuation report can provide you with strong insights into your company's overall situation. This makes it much easier for you to explore new options and make smart investment decisions that will benefit your company's bottom line. Here's a quick look at what kind of information is contained in a business appraisal report and how it can help you make positive changes in your company.

What can you do with a business valuation report?

The main thrust of most valuation reports is the overall value of a company, typically researched around the sale of a company. But when the valuation specialist researches the company and industry while developing the report, a great deal of other information has further value. What kind of information is covered in these reports?

Research into the industry is a vital part of the valuation process. The appraiser carefully considers past performance, new innovations and reasonable future projections to determine the type of growth the company may see down the road. This often includes an evaluation of your competitors, helping show where your company is strong in the market and where it is weak. 

Next, the appraiser will look at your company's finances. By looking at your finances as well as that of similar companies, it's possible to determine your business' overall financial health. This part of the process helps you find areas where your company needs work or where it is doing great. As an example, you may have a higher percentage of your business tied up in bad debts from unpaid invoices or a higher amount of capital that isn't being put to work expanding your operation when compared to most similar companies.

What about your company's material assets, equipment and machinery? Most companies prefer to simply use tax-based depreciation to determine the value of their business assets. However, if you have ever invested in high-quality equipment that is continuing to function well and provide value for long after it's been fully depreciated or have hard-used equipment that has failed well before it's been fully depreciated, those values will be inaccurate, painting an inaccurate financial picture. Part of the appraisal includes looking at the condition and determining the real-world value of your assets.

Your operation will also fall under scrutiny when your company is appraised. Are there aspects of your operations that are inefficient or behind the times in terms of beneficial technology? Are you a leader through innovation in your research and development of new products? Is there excessive waste in your production line or job sites? These areas are studied during a business valuation and their part in your company's successes and failures can provide you with strong insights into how you can improve your company's operation and bottom line while maintaining the basis for your company's success.

By getting a business valuation report on your business, you can quickly discover a wide range of benefits, from in-depth insights to market positioning information. However, you'll only be able to get this level of information from a certified business appraiser's report. This is because of the depth of research and solid methodologies that certified appraisal professionals use. Have an appraisal performed and learn where your business can thrive.

Topics: business valuation report