Jan. 17, 2009, 2:19AM
A: Too often, business owners brush aside valuations, believing them necessary only if they decide to sell. There are many other reasons to value your business. Perhaps you’re thinking about taking on a partner, or a partner is leaving the business.Other reasons for business valuations could include applying for an expansion loan, spin-offs, disputing an IRS audit, major strategic planning initiatives, estate or gift planning, and divorce. Or how about this: You might simply want to know how your investment is doing.Going through the valuation process can help you learn about those things that increase the value of your business.You can determine the value of a business in many ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professional appraisers.You can determine the value of a business in many ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professional appraisers.The price range can vary from as little as $15 for the simplest software, to thousands for a detailed analysis performed by certified professionals for midsize businesses. Business brokers, hoping to sell your business, may even do valuations for free.None of the many valuation procedures is perfect. Most valuations are based on an analysis of forecasted cash flow that produces a present value for the business. Also, there are accepted rules of thumb for all kinds of small businesses, in all types of industries.Bankers and investors, as well as the IRS, are generally skeptical about rules of thumb. You can expect both groups to require a valuation whenever a company seeks either a significant increase in credit or a new infusion of equity capital.Professional appraisers analyze all kinds of information, such as historical financial records, cash-flow forecasts, customer base, internal controls, key employees, competitive details and much more.Professional appraisers analyze all kinds of information, such as historical financial records, cash-flow forecasts, customer base, internal controls, key employees, competitive details and much more.Try to match the person or method you use for a valuation with the reason you are doing it. So, if the valuation is for a loan, look for someone who’s done them for that purpose.The American Society of Appraisers offers a free service online to help you find a business valuation expert in your area. Look for the Find an Appraisal Expert link at www.appraisers.org.
Jan. 17, 2009, 2:19AM
A: Too often, business owners brush aside valuations, believing them necessary only if they decide to sell. There are many other reasons to value your business. Perhaps you’re thinking about taking on a partner, or a partner is leaving the business.
Other reasons for business valuations could include applying for an expansion loan, spin-offs, disputing an IRS audit, major strategic planning initiatives, estate or gift planning, and divorce. Or how about this: You might simply want to know how your investment is doing.
Going through the valuation process can help you learn about those things that increase the value of your business.
You can determine the value of a business in many ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professional appraisers.
You can determine the value of a business in many ways, from quick and cheap software-based calculations you do yourself, to full-scale, certified valuations by professional appraisers.
The price range can vary from as little as $15 for the simplest software, to thousands for a detailed analysis performed by certified professionals for midsize businesses. Business brokers, hoping to sell your business, may even do valuations for free.
None of the many valuation procedures is perfect. Most valuations are based on an analysis of forecasted cash flow that produces a present value for the business. Also, there are accepted rules of thumb for all kinds of small businesses, in all types of industries.
Bankers and investors, as well as the IRS, are generally skeptical about rules of thumb. You can expect both groups to require a valuation whenever a company seeks either a significant increase in credit or a new infusion of equity capital.
Professional appraisers analyze all kinds of information, such as historical financial records, cash-flow forecasts, customer base, internal controls, key employees, competitive details and much more.
Professional appraisers analyze all kinds of information, such as historical financial records, cash-flow forecasts, customer base, internal controls, key employees, competitive details and much more.
Try to match the person or method you use for a valuation with the reason you are doing it. So, if the valuation is for a loan, look for someone who’s done them for that purpose.
The American Society of Appraisers offers a free service online to help you find a business valuation expert in your area. Look for the Find an Appraisal Expert link at www.appraisers.org.
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