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.