Why Business Valuation?

The business valuation (or business appraisal) can be used for many reasons. There are typically very specific legal or tax related reasons. A valuation is not always needed or required to sell a business. Professional buyers, be they companies or Private Equity Groups have their own methods to determine values that work for their specific situation. We understand those methods and use very similar analysis to help you understand how your company is viewed in the marketplace.

When a formal valuation is required, BMA can assist with obtaining an independent third party appraisal of your company. Some instances you may need a formal valuation include:

• Partner Dispute / Divorce / Litigation
• Obtaining Financing or Debt Recapitalizing
• Gift Tax
• Buy/Sell Agreements
• Estate Tax Planning
  
  

How is Value Established?

Remember a business is truly only worth what the market will pay. Although an appraiser looks at many valuation methodologies, these are four common methods::

1. multiple of earnings / cash flow
2. comparable transactions analysis
3. asset-based valuation
4. discounted cash flow analysis

Valuation experts, mindful of the strengths and weaknesses inherent in each approach, will value a company with more than one of the methodologies, simultaneously comparing results to determine a correct valuation. Included in the process is an analysis of growth potential, risks, industry factors and other variables that may impact the value of an enterprise.

What Is The Cost?

The cost of the valuation varies with many factors including purpose (whether for internal or external purposes, acquisition or litigation), business size, type of corporate identity, years in business, whether the business has clean books, etc. Regardless a valuation, from a reputable and experienced appraiser does not need to cost tens of thousands of dollars.

Fees for Formal Valuations are typically $5,000 to $15,000 depending upon the scope of work.