Business Valuations

 

There are many reasons why Business Valuations are important to you … and they almost all have to do with money. Consider the following …

Business has been good, revenues and profits are growing daily and you want to take advantage of this good fortune and sell your business now. To do so, you’ll need to engage in marketing and advertising in order to locate a suitable buyer. If all goes well, you’ll find more than one buyer and that will enable you to select the best and most profitable offer.

In this scenario, your standard of value is “fair market value.” Your premise of value is a business sale of 100% ownership interest on a going concern basis. In other words, your goal is to sell your business to the highest bidder and someone who will also be able to continue running the business seamlessly as the new owner.

Perhaps you currently own a small business and have a product that interests a large public corporation. They’ve already approached you with an offer to buy the company you own. They love your product and have developed plans to sell it internationally. They are even willing to offer you stock to get you to sell your firm to them. Your CPA has even advised you that the sale of your business to this large firm, under the conditions they’ve outlined, can significantly lower your tax burden.

In this scenario, you have found a synergistic buyer who is applying the investment standard of “measuring” your business before making an offer to you. Such buyers are often willing to “pay a premium” for a business because they believe they can realize some significant advantages. Clearly, you will benefit, as well.

Now, consider this third scenario in which the business owner needs to settle a large debt with an impatient creditor. The business doesn’t have enough cash on hand to settle the debt which means that assets need to be sold … quickly. In this case, where the forced liquidation premise of value may apply, the business owner doesn’t have enough time to find a suitable buyer for his company and may have to resort to a quick auction sale.

The point of all these different scenarios is this: there are many ways to measure the value of your business and they are all important. Once you know under what conditions you will measure business worth, you will need to gather the relevant data that impacts the value of your firm. It may include financial statements, operational procedures, marketing and business plans, customer and vendor information, even staff records.

As you can readily see, it involves lots of work. In order to properly value your business, you may need to consult with a CPA who specializes in this kind of work. Davidoff & Associates can put you in direct contact with a highly qualified Business Valuation Specialist who will be able to accurately analyze your firm’s true worth.

You’ll be able to use that valuable information to sell your company for the very highest possible price. And that, of course, will maximize your return.  Please contact us to get the ball rolling on the valuation process.