Quite simply, a business valuation objectively determines the value of your business.
You might prefer to state the value of your business in your own terms, of course, but anyone looking to buy your business will definitely want to know how an objective party would value your business, based on a pre-set series of determinations that more accurately calculate the kind of return they can expect to see on the investment.
That said, potential buyers aren’t the only ones who will require business valuations. You may also need a business valuation if you want to:
- Obtain financing for your business
- Settle a Shareholder Dispute or reach a Shareholder Agreement
- Determine the value of your business for a divorce settlement
- Open an Employee Stock Option Program (ESOP)
- Plan your estate or gift taxes
- Put in an insurance claim
- Successfully navigate litigation against your company
- Conduct a merger or a partnership buyout
- Convert from a “C” Corp to an “S” Corp
- Allocate a Purchase Price
- Create a Valuation Report
Every potential transaction requires a different type of business valuation, and some can be quite complex, but in broad terms there are three basic types:
1. Brokers Opinion of Value (BOV)
If you are the owner of a business considering a sale, you’ll most likely want a Brokers Opinion of Value. This report brings together a Most Probable Selling Price (MPSP) for the business by using three valuation methods – Market Data, Income, and Cost or Asset Approach. This will give you a starting point for setting a price on your business for sale. Click this link to see a sample Brokers Opinion Of Value
2. Business Valuation or Short Report
In non-litigation situations where you need to determine the selling price of your business, such as in the case of entering into a buy-sell agreement with a partner or shareholder, you’ll want a business valuation or short report. This is a restricted-use abbreviated report that gives a formal summary that allows all parties to agree on a selling price.
3. Business Appraisal or Full Report
In legal situations, you’ll want a Business Appraisal or Full Report. If you’re dealing with a court of law or the IRS, this report is suitable for litigation support and review by third parties. It explains in a step-by-step manner exactly what was done to determine the value of the business and the process by which the value was derived.
All of our valuations are performed by qualified appraisers experienced in all aspects of business valuation and business transfers. The Business Valuations and Business Appraisals from Rogerson Business Services are performed in compliance with:
- Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP)
- Business Appraisal Standards of the Institute of Business Appraisers
Compliance with these industry standards ensures that proven peer-reviewed valuation methods are used and that the valuation meets the highest standards of the industry. This is to your advantage, because it means your business valuation or appraisal includes a defensible opinion of value that makes it very difficult to dispute in legal situations.
Get in touch today to talk about your business valuation needs. Andrew will be happy to help you, in any way he can.Contact us here