We offer small business valuation reports for clients who need an accurate estimation of the fair market value of their business.
Our accountants utilize databases with thousands of sales statistics for local businesses. As a result, we carefully go over your current books and past tax returns and then examine market trends to give you a sense of what your business is worth.
Equipped with this new knowledge, you can go about the process of selling your business in a much more focused and confident manner.
Reasons for Conducting a Business Valuation
- Employee Stock Ownership Plans (ESOP)
- Securities & Exchange Commissions Matters
- Fair Value Reporting
- Fairness Opinions
- Federal Gift and Estate Tax Matters
- Mergers and Acquisitions
- Dissenting Shareholder Suits
- Stock Options – 409A & 123R
- Lost Profits and Damage
Business valuation reports may be needed for a variety of different reasons. The most common reason however, is if you’re looking to sell your business.
It is likely your business represents a major portion of your total assets. Given this reality, it’s easy to understand why obtaining an accurate valuation report is important for ensuring a bright and comfortable future for yourself.
Our business valuation service includes reviewing your current books along with past tax returns, and through comparative analyses we make a determination by utilizing our database of nearly 10 thousand prior business sales. With our report, combined with the advice from one of our experienced CPAs, you can gain a deep understanding of the true value of your business. This way, you can plan for the future with greater confidence.
We have solutions for:
- Estate Tax Valuations
- Business Valuations
- Purchase/Sale Valuations
- Economic Damages
- Gift Tax Appraisals
- Buy-Sell Valuations
Frequently Asked Questions
How do I calculate the value of my business?
Typically, business valuation is your ROI percentage: (Return/Original Investment) x 100%. How much has your business made from what’s been put into it. There are a few different methods of calculating your business ROI however. For instance, if your business is thriving due to an angel investor and your top accountants indicate the business won’t turn a profit until 2 years from now, then using historical metrics won’t work — especially if you’re trying to insure your business. Then, you may want to utilize discounted cash flow — looking toward the future forecasts.
What are the top 5 methods of business valuation?
- Discount Cash Flow Valuation
This is the preferred method of valuation for companies that have taken out a loan or are relatively young. Essentially, this is a way of using your company’s forecasted earnings and applying the present day value. For this reason, it’s often recommended to use at least two of the methods of valuation for your business.
- Historical Earnings Valuation
This method is especially useful for longstanding companies. You’re able to use the historical ROI of the company to showcase its value. This is especially helpful if your company has repaid debts, loans and maintained a positive cash flow.
- Relative Valuation
This form of valuation is much like comps for real estate. It takes into account what a similar business, comparable to yours has been valued at.
- Asset Valuation
This is one of the most meticulous forms of valuation (and all the more reason to maintain accurate, constantly updated books). Asset valuation means compiling all of your company’s tangible and intanglible assets and utilizing their market value. This includes your client list, equipment, stocks, trademarks, everything.
- Future Maintainable Earnings Valuation
This form is a sort of hybrid of the historical earnings method and discount cash-flow wherein you look at the past 3 years and your forecast to create a holistic view of your ROI.
What is the best company valuation method?
There’s really no best/worst method so long as you’re working with good data. Bad data in results in bad data out. However, this is also why it’s recommended to evaluate your business using at least two different methods to ensure accuracy for your sake, prospective buyers, and investors.
For additional information, view our blog article on business valuation reports.
Image credit: House Buy Fast