How to Choose a Business Valuation Company
Picking a Business Valuation Service
Table of contents
How to Valuate Your Business
It is necessary to perform thorough research before selecting an accredited business valuation company. Acquaint yourself first with a company’s valuation methodologies and ensure they have a strong understanding of the industry. Doing so will result in a fair and positive business valuation.
When choosing a business valuation company, there are major factors you need to consider: company integrity, credibility, knowledge, experience, and overall service. These ensure the company you will be hiring can meet your specific needs.
A certified business valuation by an accredited Business Appraisal FL|GA|HI team member is one of the best examples of a top-notch service that every business owner should seek when planning to sell a company. However, several differentiating factors put one company above another in terms of efficiency, experience, credential, and overall service. You should consider many important considerations when deciding which business valuation company you’re going to hire when you decide to sell your business.
Furthermore, the value of your business could vary widely both in cost and outcome, depending on the purpose of the assignment and the qualifications and experience of your appraiser. Here are just a few examples to consider when making these critical choices:
The audience for a Business Valuation
1. Investment Bankers
An investment banking company determines your highest value for a synergistic buyer. They will often have CVAs in-house or use a third-party Accredited Valuation Firm.
2. Divorce Attorneys
Florida is one of 35 US states where personal goodwill can be deducted from marital assets. You need to know how your personal goodwill impacts your value for marital dissolution, as it can be 25-50% of the total business valuation.
3. Business Brokers
A business broker provides a range of values based on “rules of thumb” and market multiples before receiving your listing engagement. Will this value carry any weight with astute buyers once they know the broker is paid a commission on the selling price? Conversely, if the value is too low to justify a sale right now, will this “down & dirty” valuation provide you with any significant information about how to increase the value of your business in the years to come?
4. Financial Advisors
Your financial advisor relies on your opinion of your business value for retirement planning and purchasing life insurance to fund a buy/sell agreement. Many owners understandably hold “intrinsic value” in their business, which is typically inflated. The risk is you will fall short of meeting your retirement goals and overpay for too much life insurance.
5. Certified Public Accountants
Your CPA helps you determine an appropriate asking price. However, as one of your paid advisors – who are not accountable for getting you that value – can you rely upon that figure as truly unbiased? In addition, if your CPA supplies you with your yearly audited financials, they cannot also Value your company.
6. Certified Business Valuation Companies
A highly qualified and reputable firm experienced in Litigation Support, Estate, and Gift Tax valuations can accurately defend your marketability and minority discounts in a Shareholder dispute or to the IRS. In addition, they can identify your unique competitive advantage to exploit a higher value for a sale to a strategic acquirer.
Accreditation, Experienced, and Cost
There are many things to consider when choosing a business valuation firm. Of all these, accreditation, experience, and cost are the most significant factors. These are the ones you should never lose sight of.
Accreditation. Take note that a certified business valuation by an accredited business appraiser should be your utmost priority. An accredited expert can easily show that he or she has advanced experience and knowledge. These aspects are required to deliver reliable and quality business valuations.
Experience. An experienced business valuation firm has access to the latest economic data and relevant information that can potentially support valuation discounts. The more assets a highly experienced business appraisal company has, the greater it can help you get the right value for your business.
Cost. Business valuation costs may vary greatly. They may depend on the size of the company, the purpose, the nature of the valuation methodology, and the difficulty of its operations.
What Can Business Appraisal FL|GA|HI Provide You?
Business Appraisal FL|GA|HI will provide you with a reality check! We will decide if the valuation of your company makes sense in the real world. We have a certified team of accredited business appraisers who can carry out the valuation of your business. They are all capable of targeting the correct audience. For example, partners, family members, shareholders, potential buyers, IRS, estate planning, lenders, or potential equity investors.
“The key to receiving ‘value’ from your investment in a business valuation is choosing the appropriate purpose and appraiser for your engagement.” – Chris Curtin, CVA
Business Appraisal FL|GA|HI, together with Bankers Advocate, has an appraisal product for every business size and price point. Also, we have partners who have been appraising Inventory, Machinery, and Equipment for 25+ years.