What is the importance of a third-party business valuation?
An independent, professional business valuation will eliminate hunches and guesswork, allowing a business owner to know what their business is truly worth. It will identify tangible and intangible value of a business to inform existing business owners, potential buyers, investors, lenders, and other related parties. Without a professional business valuation, a company's value is derived from heavily biased opinions (typically the owner or their CPA) and is not respected or recognized during significant financial engagements.
Who performs the business valuation?
We offer both virtual and “localized” fulfillment models. Business owners select the most qualified business appraiser who can best meet their requirements. The individual deemed best to suit your needs conducts the actual business valuation through his/her advanced systems, applications, processes and technologies. We ensure a credentialed NACVA CVA (the highest credential in the industry) reviews all valuations before they are final and presented to you.
Should you require in-person services, then the identified consultant will provide confidential and discreet, in-person advice, services, and support. Their responsibility is to ensure that all necessary information about your business is gathered, reported and accurately prepared under the strictest levels of confidentiality (due to geo-local factors). Their purpose is to become intimately familiar with your business through face-to-face meetings and investigations with you, the business owner.
Is there a difference between "book value" and "fair market value"?
Yes! There is a significant difference between "book value" and "fair market value".
"Book value" is an accounting view of the business. This perspective reduces the values of items owned by a business for tax purposes. As a result, "book value" does not provide an accurate economic perspective of the entire business and its operation.
"Fair Market Value" identifies the true economic value of a business, its assets and their income generating capacities. There are many techniques involved in calculating the "fair market value" of a business to ensure accuracy and fairness. Consequently, this perspective is what a willing buyer and willing seller would agree to when a business is sold. For more details on "fair market value", click here.
Why can't my CPA appraise my business?
The majority of CPA's are not focused, experienced or fully-capable of conducting a high-quality, cost effective business valuation. Most have a limited knowledge base in conducting market research, assessing market comparables, and understanding the dynamics at play in buy-sell transactions.
In contrast, there are CPA firms that have a specialization in business valuations but those are typically geared towards very complex events such as 409A compliance, tax issues, litigation, etc. These types of valuations typically well exceed tens of thousands of dollars.
How much does a business valuation cost?
Business valuation prices can vary dramatically from firm to firm. This is due to a provider's areas of expertise, available resources, geographic restrictions, infrastructure, etc. Traditionally, professional business valuations will cost anywhere from $6,000 to $30,000+ based upon complexity. Inc.com has a great article on "How much should a business appraisal cost?".
Fair Market Valuations is proud to partner with experienced and qualified business valuation providers where engagement fees typically ranging from $3,500 to $8,000. In addition to receiving industry-respected, professional business valuations, our clients also receive significant benefits from the exploratory meetings they have with our professional experts.
How often should I have a business valuation conducted?
This is really dependent on the purpose of the valuation. We specialize in assisting small to middle-market sized businesses truly understand their market value in order to sell, buy or strategically grow their company. As economic conditions change it is prudent to continue to understand the value of your business.
If you have additional questions about business valuation and its importance to your business, please contact us today or call us at 877-VALU-BIZ.