The business valuation (or business appraisal) can be used for many reasons. There are typically very specific legal reasons. A valuation is not always needed or required to sell a business. Professional buyers, be they companies or Private Equity Groups all have their own methods to determine values that work for their specific situation. We understand those methods and use very similar analysis to help you understand how your company is viewed in the marketplace.
When needed, VR can assist with obtaining an independent third party appraisal of your company. Some instances you may need a formal valuation include:
Buy/Sell Agreements
How is Value Established?
Remember a business is only worth what the market will pay. Although an appraiser looks at many valuation methodologies, these are four that are most widely accepted:
1. multiple of earnings / cash flow
2. comparable transactions analysis
3. asset-based valuation
4. discounted cash flow analysis
Valuation experts, mindful of the strengths and weaknesses inherent in each approach, will value a company with more than one of the methodologies, simultaneously comparing results to determine a correct valuation. Included in the process is an analysis of growth potential, risks, industry factors and other variables that may impact the value of an enterprise.
How Long Does It Take?
Limited Scope Valuations, which are often used for obtaining lender financing or conducting periodic analysis of the marketplace, can typically be completed within 7-10 business days. Full Appraisals, which are typically required for any form of tax planning or litigation will require 3-4 weeks to complete.
What Is The Cost?
The cost of the valuation varies with many factors including purpose (whether for internal or external purposes, acquisition or litigation), business size, type of corporate identity, years in business, whether the business has clean books, etc. Regardless a valuation does not need to cost tens of thousands of dollars.
Fees for Limited Scope Valuations are typically $2,500 - $5,000. Fees for a Complete Valuation are typically $5,000 - $15,000.
Each assignment is priced accordingly to the scope of the project.
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