Summary
An accredited individual who is qualified to determine the economic value of a company or business.
How do you choose the right valuation analyst for your business?
- How do you choose the right valuation analyst for your business?
- What professional performs a business valuation?
- What is a business valuation professional?
- What is a business valuation?
- How is a business valuation specialist involved?
- What does a business valuation specialist do?
- What qualifications are needed to perform a business valuation?
- Why is the role of the certified business valuator important?
- What is a business valuation professional conclusion:
What professional performs a business valuation?
What is a business valuation professional?
A business valuation professional is an accredited individual who is qualified to determine the economic value of a company or business.
Operating a business involves many aspects. Internally, business owners must ensure that production, operations, and sales are effective. In addition, company leaders may be trying to establish a partnership, settle ownership disputes, or bring in a third party.
Within the life cycle of a business, however, owners will likely benefit from consulting with a business valuation professional — like those at Business Appraisal FL | GA.
Read our guide on how to choose the best business appraiser.
What is a business valuation?
A business valuation, or business appraisal, is the process that determines the current economic worth of a business. To complete the valuation, an accredited business appraiser will analyze all parts of the company to determine the value of its components and their sum.
Your business is an economic engine where you must pay special attention to its actual flow during the valuation process.
Read what is a business valuation.
How is a business valuation specialist involved?
Business owners who need a fair estimate of their company’s market value often consult these professionals.
As business valuations are increasingly needed and, specific financial standards are more accepted, the demand for business valuation specialists will continue to increase.
A certified business valuation by an accredited Business Appraisal FL | GA team member takes strategic and in-depth analysis to determine an accurate estimation of a company’s worth. The process is complex and involves various considerations, calculations, and studies.
Although working with these professionals often takes several weeks, the comprehensive valuation report produced will make the wait worthwhile.
Some of the primary sections of a business evaluator include analyzing:
- Financial options for exit strategy planning and retirement
- Business risks and rewards
- Tangible and intangible assets of a company
- Future earnings projections
What does a business valuation specialist do?
These individuals work with various businesses across many industries to ensure that there is an effective analysis of the company’s value.
Although the reasons for obtaining a business valuation may vary, appraisers’ approach to conducting such analysis tends to be standard. In general, they assess the financial health of a business by considering its team, assets, earnings, growth, and losses within the context of its specific industry.
There are, however, a variety of methods that a business valuation specialist may use to determine a valuation. These methods include the market approach, the income approach, and the asset approach.
- Market Approach – With this approach, the evaluator will consider similar businesses’ selling prices and use data to estimate your company’s worth. Competition is the driving force behind this approach to establishing your company’s value. Thus, this technique is like that used in a home’s value appraisal.
- Income Approach – Depending on the specific formula used, this approach capitalizes, discounts, or multiplies the current cash flow. This helps determine the future financial value of the company. At its core, the method considers the expected economic benefit and level of risk that would come from an investment in the business.
- Asset Approach – As part of this method, the appraiser sums up all the tangible elements that make up the business. As a result, the appraiser considers all equipment, stock, and supplies separately before added together. This total dollar amount becomes part of the business’s overall value to potential buyers or shareholders.
Each approach, although unique, will provide you with an estimate of the company’s worth from a different perspective.
Read a professional valuation gives your business’ true worth.
What qualifications are needed to perform a business valuation?
Individuals interested in serving as a business valuation specialist would need the proper training. specifically, training through a business valuation accreditation program. Courses are often offered at organizations or with third-party trainers. Testing is a crucial part of the training.
Accredited members pay an annual fee to maintain their membership in the organization. Specialists must take part in continuing education and training programs.
Business valuation specialists can obtain accreditation from a variety of organizations. Our Accredited Valuation Analysts (AVA) at BA FL|GA are credentialed to perform business valuations that conform to all Internal Revenue Service (IRS), American Institute of Certified Public Accountants (AICPA), and the National Association of Certified Valuation Analysts (NACVA) Professional Standards.
Why is the role of the certified business valuator important?
Professional valuators are vital to the functioning and success of many companies. For example, you may need an honest appraisal to obtain a business loan. This is often the case if the lender is a traditional bank. You may also seek a valuation to establish a partnership, settle ownership disputes, or bring in a third party. A business appraisal may even be needed if you plan to gift a portion or more of your business for estate planning purposes.
But such valuations may not always be ordered by the owner. An entity, such as a commercial lender, legal practitioner, tax official, or court, may require an independent business appraisal for its own purposes.
Here is our short guide on choosing a business valuation company.
What is a business valuation professional conclusion:
Whether you need financing to expand your operations or to plan for succession, an independent and accurate business valuator is a crucial asset to your business plan. Their work helps determine your company’s true economic value, so you can better manage it.
Connect with our team of expert valuators today.
As a business owner, do you need help with your business valuation steps or what makes up business valuations? Please call or contact BA FL|GA.