Business Valuation and How It Works
Every business should have on hand a business valuation, which is updated every year. Like a current resume and business plan, a current business valuation can allow you to take advantage of opportunities, protect your family in case something happens to you, and allow you to move quickly when you are ready to sell your business.
What a Business Valuation Is
It's a process similar to an appraisal for a home sale, in which a business appraiser inspects and analyzes the entire business. This process usually includes valuation of assets (including depreciation) and other factors.
Businesses can be valued in several ways, depending on the circumstances of the valuation (sale or bankruptcy, for example). If a business is being offered for sale, more than one valuation method may be presented, s part of the business valuation report. Sections of a business valuation report, including an economic analysis, industry analysis, and discussion of valuation methods used.
Things happen, in business as in life. Just as you should always have a resume ready, and you should keep your business plan updated, you should prepare a business valuation and update it every year. Here are some reasons why you might need that business valuation report.
An appraiser is an individual who estimates the value or worth of something. An appraiser sets a value on a property or other assets, including the assets of a business. There are many different kinds of appraisers, many of whom specialize in various types of appraisals. This article discusses how to find and use a business appraiser.
If you are considering selling a business, here is a list of documents and information you will need to put together. Pay particular attention to the first two items, what is being sold, and what is not being sold.
Intangible assets are those assets without physical form. These assets include intellectual property like patents, trademarks, and copyrights. They also can include contracts and licenses, technology, and customer relationships.
No business valuation should be undertaken without considering the value of intangibles. This article discusses the different types of intangibles and how they provide value to a business.
Before a business valuation report is prepared, the company's financial statements are adjusted, to remove discretionary items and one-time occurrences, and to bring accounts to current market value.