Do you have the highest and most accurate
valuation for your business?
Most
experts advise a complete valuation to account
for all of the factors which impact the value of
your business. These factors include:
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Reputation |
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Contracts |
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Management |
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Advanced
technology |
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Trade
secrets |
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Skilled
employees |
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Computer
databases |
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Excess
owner expenses |
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Name
recognition |
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Competitive
advantages |
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There
are a number of instances when you may need to
determine the market value of a business.
Certainly, buying and selling a business is the
most common reason. Estate planning,
reorganization, divorce or verification of your worth for
lenders or investors are other reasons.
Valuing
a company is hardly a precise science and can vary
depending on the type of business and the reason
for coming up with a valuation. There are a wide
range of factors that go into the process -- from
the book value to a host of tangible and
intangible elements. In general, the value of the
business will rely on an analysis of the company's
cash flow. In other words, it's ability to
generate consistent profits will ultimately
determine its worth in the marketplace.
Business
valuation should be considered a starting point
for buyers and sellers. It's rare that buyers and
sellers come up with a similar figure, if, for no
other reason, than the seller is looking for a
higher price. Your goal should be to determine a
ballpark figure from which the buyer and the
seller can negotiate a price that they can both
live with. Look carefully at the numbers, but keep
in mind this caution from Bryan Goetz, president
of Capital Advisors, Inc., a business appraiser:
"Businesses are as unique and complex as the
people who run them and are not capable of being
valued by a simplistic rule of thumb."
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An
inaccurate view of the value of
your business (whether too high
or low) will adversely impact
the success of your sales
efforts. |
