A Business Valuation is an important tool because it helps to validate and benchmark the true value of your business. Once you know how to value a business and learn the value of your business, you can concentrate your resources on maintaining and increasing its value.
Business Valuations prepared by a business valuations services expert sets in place a credible value benchmark. Professional business valuations services prepare a fully documented detailed written report and provide a realistic, credible, and defensible value of a business.
Our practical knowledge of how to value a business results from our daily involvement with Business Sale and Merger & Acquisition services. Our inside-out knowledge of Business Sale (Mergers & Acquisitions) and Valuation Methodology expertise results in business valuations that are more accurate, credible and defensible than business valuations prepared by companies that do not poses market experience and business sale (merger & acquisition) expertise.
Identifying Business Valuation drivers reduces risk and increases business value and the probability that the business will grow in revenue and profitability. If these characteristics are present in a business, the business can command a premium value.
American Fortune offers three different levels of business valuations service. Choosing the right valuation report depends on what the end-result of the valuation needs to satisfy. How strongly will it need to be defended? Does the recipient need or require much detail? How complex is the business? How knowledgeable and experienced are the buyer and their advisors?
Business Value Estimate = $1,250
Business Value Estimate This report is specifically designed for business owners to provide a fast and easy estimate of value for a business. The report is based on a combination of 8 valuation methodologies, a comparative data that help verify the estimate of value. This report is not a professional valuation of a business and is not suitable for use in estate planning, divorce proceedings, buy-sell agreements, ESOP’s, IRS issues, or legal proceedings. This valuation is not intended to defend the business value with potential buyers. The report is 38-41 pages. To view a sample Summary Value Estimate click here View Sample.
Calculation of Value = $2,300
A calculation of value is NOT a Valuation (Appraisal) because the appraiser is not coming to a “conclusion of value”, but merely a “calculation of value” complete valuation (appraisal) since it is based on a limited amount of investigation and due diligence. Although a Calculation of Value does not meet USPAP or IBA Standards, it can be a very valuable tool for business owners, professionals or other purposes. This value report takes basic value drivers to produce a semi-formal valuation. It utilizes four to five valuation methodologies. This type of value report yields a moderately defensible valuate report. Typical uses for this report are: Assisting an owner, broker or m&a advisor to establish an initial asking price for the sale of a businesses, Estate planning, Business planning, Developing a “preliminary” value for litigation matters, Any matter where an “initial” or “calculation” of value is acceptable, Businesses with an EBIDTA of less than $300K. The report is 30-33 pages. To view a sample Calculation of Value Report – View Sample
Comprehensive Valuation = $4,000
This type of report explains in full detail how the value was derived as directed by the Uniform Standards of Professional Appraisal Practice (USPAP) and American Society of Appraisers (ASA). A comprehensive business valuation incorporates broad and complex business reviews, financial reviews and analysis. This valuation is very accurate and defensible. It utilizes seven to ten valuation methodologies. This type of report is used for the following: Business sale, Acquisition or Merger, SBA or conventional financing, Estate tax or gifting purposes, Any matter where the intended users are “familiar” with the subject to be valued, When a accurate and defensible valuation is vital, Businesses with an EBIDTA of $300K or more. The report is 40-50 pages. To view a sample Comprehensive Valuation Report click here View Sample.
The following are areas to review and address for Business Value Driver Planning:
1. Management team: Many business owners make the mistake of retaining complete control, which makes it hard to separate them from the business. Designate a manager or assemble a management team that is capable of running the business now and after the owners departure.
2. Systems and procedures: Reliable systems and well-documented procedures will help sustain the growth of a business and ensure a smooth transition to a new owner. Create a business plan, job descriptions and systems manuals.
3. Customers and suppliers: Create protection from the loss of a single customer or dominant supplier; diversify the customer and supplier base. No one customer should account for more than 20% of the total sales. Take time to investigate suppliers it may reduce the cost of goods.
4. Facilities and equipment: Make sure the facilities are up to code. Invest in new equipment and maintain service records.
5. Financial discipline: Business valuation are based on the health of their historical income statements as well as five-year projections. The financial records need to be accurate and verifiable.
6. Growth strategy: The ability to demonstrate a realistic growth strategy is vital to the perceived value of a business. Creating a realistic pro-forma statement with projected discretionary earnings will communicate future value and opportunities.
7. Profitability analysis: Once the value drivers are identified and understood, and the valuation of the business is completed, the next step should be to perform profitability analysis drivers. This starts with understanding where the business makes and loses money. Finally perform a SWOT analysis. Identify the company’s true strengths, known weaknesses, growth opportunities and threats to the future of the business.
To learn how to value a business speak with one of our Valuation Advisors at (800) 248-0615.
We have provided performed business valuations services in most areas of the USA.
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