Everything to Know about a Company Valuation Report
Table of contents
Why do you Need a Business Valuation Report?
A business valuation, or business appraisal, is the process that determines the current economic worth of a business. To complete the valuation, you will need the help of an accredited business appraiser. They will analyze all parts of the company. Doing so will help determine the value of its components and their sum during the valuation process. This work will be in a business valuation report.
An essential part of the valuation is creating a business valuation report. This document assesses and reflects the true value of a company or its group of assets.
Please read how to obtain a business valuation before selling your company.
Business Appraisal Report plus Real Estate Appraisal
Many times we will combine our fair market value work with a 3rd party real estate property valuation report to give you a comprehensive valuation report.
Read what is a business valuation and what financial analysis it includes about the subject company.
This report is all-encompassing of the enterprise’s true value. In other words, the document offers an analysis of the company’s financial data and insight into the industry and comparable companies.
Read the difference between a business valuation, evaluation, and an appraisal when discovering your business value.
But first, what does a valuation of my business entail?
Although the reasons for obtaining a business valuation may vary, appraisers’ approach to conducting such analysis tends to be standard. In general, the appraiser assesses the financial health of a business by considering many elements. Such elements include the company’s team, assets, earnings, growth, and losses within the context of its specific industry.
There are, however, a variety of methods that an appraiser may use to determine a valuation. If you have a small business, a value plan appraisal will meet your needs for estate planning.
What methods are used in a business valuation?
Each approach is based on varying financial facts and expectations that may result in a different valuation.
- Discounted cash flow approach: This approach is reliable for individuals who want to buy a business. That is because this method emphasizes sales and profit trends that impact a company’s value. This method reflects the amount of capital expected by the investor to reach the market in a few years.
- Assets-based approach: The assets-based approach is the most common way for appraisers to value a company. This is because a company has a variety of tangible and intangible assets that add to its value.
- Comparable or Market approach: With this approach, appraisers analyze the financial worth of similar companies and recently sold businesses in the same geographic area. This method is similar to the comparative market analysis in real estate.
- Income approach: This approach attempts to quantify a business’s value by calculating how much revenue the enterprise will make moving forward. Additionally, it also considers the risk factors involved.
Business Appraisal FL|GA|HI will always use at least six business valuation methods, including book value, the asset-based valuation method or liquidation value, the discounted cash flow analysis, and the market value method, to determine the fair market value of a business.
Your business is more than just a PE ratio. Our business appraisers will make sure you understand the value of your business in the final business valuation reports.
What does a company valuation report include?
A business valuation report prepared by expert appraisers like those at BA FL|GA|HI is comprehensive, detailed, and all-encompassing of the factors that most impact your company’s value.
Business appraisal reports will provide the explanation behind why and how the valuator produced your enterprise’s economic value. This is an essential aspect of the report because soliciting a free valuation, for example, from an online business valuation source, may provide inaccurate values that fail to provide impartiality and depth when determining the business’s actual value.
However, for those who work with experts, a business valuation or appraisal report may need to be more manageable to understand the value of your business.
Here are five key elements to consider in business appraisal reports for understanding your company’s value:
- Appraisal summary: A table summarizing the final valuation of your company, including values and methods used.
- Summary of approaches and value indications: Insight into the valuator’s methods and explanations for choosing specific approaches.
- Normalizing adjustments: Removing non-recurring or unrelated items from the financial statements.
- Discount rate summary: Reviewing the discount rate used for determining the company’s value.
- Business validation summary: Factors that contribute to or impact the company’s value, such as assets, liabilities, and market comparisons.
Company Valuation Report Conclusion:
Many factors contribute to the value of a business, and such factors will be summarized in a valuation report. Working with expert appraisers like those at BA FL|GA|HI, thus, guarantees that you’ll walk away with a great understanding of the valuation reached.
The Business Appraisal FL|GA|HI valuation reports can help you make sense of the many factors that impact your company’s value. Whether you are pondering a prospective business transaction, launching into succession planning, or encountering financial distress, our team effectively assimilates the information, makes the tough calls, and renders a robust valuation to help you reach your objective.
Would you like a sample business valuation report with pricing for your company? Please contact BA FL|GA|HI for your business appraisal report needs.