To reflect the years of hard work in accumulating a business’s tangible and intangible assets, a business owner must use more than tax returns and financial statements as the basis for the financial presentation of their business. While using tax returns and financial statements may be good for tax purposes, they do not indicate the business’ goodwill or intangible value. Goodwill, or intangible value, represents what the business is worth in many cases and is not specifically addressed in customary financial statements.
A comprehensive business valuation report is strongly recommended to be included in the offering package of any business listing offered at $150,000 or above.
The purpose of a business valuation:
- Sell your business at the Fair Market Value.
- Provide a lender with Fair Market Value information for a business loan.
- Plan for a merger, acquisition or stock offering.
- Develop an estate plan or tax plan to protect your wealth.
- Transfer of the business into a trust or create a succession plan.
- Determine the value of assets and liabilities for a divorce settlement.
- Assist attorneys in litigation.
- Settlement of an insurance clam.
- Set up an Employee Stock Ownership (ESOP)
- Partnership buyouts/ins
Whatever its purpose, a valuation can play a key role in helping you achieve your financial goals. Anyone who has ever purchased a home knows that an independent appraisal report had to be prepared to complete the sale. A business is many times more complex.
The key to having a viable valuation performed on a business is to have it performed by an independent third party service. Without a third party report, a business owner should be prepared for heavy negotiations. It will be your opinion of value versus a buyer's opinion. Do you really want to negotiate on price? A professionally prepared valuation report adds credibility to your marketing package and facilitates a quicker more effective business transfer.
There is a big difference in the quality of valuation reports. Some firms rely on generic valuation software reports that may or may not be based on proven theories. Brookmoor Adams Advisors recommends a valuation report be prepared by Accredited Valuation Services, Inc. because their independent report presents a true analysis of the business.
Brookmoor Adams Advisors works directly with an Accredited Valuation Services, Inc. certified valuation analyst. Together they consider the age of the business, client base, goodwill, competitive advantage, market position, and other intangible factors. Using a detailed and disciplined approach, and a proprietary questionnaire developed over the last twenty years, the company's critical information is professionally packaged. The goal is to have a complete understanding of the factors that will influence, and maximize the price of your company.
BBN affiliated brokers and intermediaries report their closed deals to Accredited Valuation Services, Inc. resulting in an unsurpassed database of thousands of private transactions. Since Accredited Valuation Services, Inc. performs thousands of valuations each year, the business owner can be assured that the opinion presented by Accredited Valuation Services, Inc. reflects the most current market trends for similar businesses.
Unique to Accredited Valuation Services, Inc. reports is the "Owners Justification of Purchase Price." This analysis looks at the price of the company from a buyer's point of view. The report justifies for the business buyer that the recommended price of the business is fair and to the seller that the business is priced to obtain the maximum value.
Business intermediaries have consistently produced higher prices and smoother sales when a Accredited Valuation Services, Inc.valuation report is presented as part of the business-offering package. Our experience shows that a professional business valuation is one of the keys to achieving your goals. Without one, values can vary significantly. A seller should consult with a professional broker to assist in the valuation process.