Business Valuation Services
Posted by Valentiam Group on March 18, 2020
Expert Business Valuation Services
Regardless of the reason your business might require a valuation, you’re more likely to get an accurate and defensible value by using a professional business valuation service.
Valentiam’s valuation experts have decades of combined experience in valuing a wide range of businesses—both in the U.S. and internationally. Our team of professionals includes chartered financial analysts (CFA), certified valuation analysts (CVA), and accredited senior appraisers (ASA). We also have extensive experience in dispute resolution and have provided expert testimony in many cases involving litigation. Fill out the form at the right to learn more about our services and discuss your valuation needs.
In any business, there are a number of situations which may necessitate an independent business valuation. Professional business valuation services assign fair and reasonable values to companies using a variety of approaches and metrics. Valuation professionals have the training, expertise, and professional credentials needed to determine the correct valuation approach, using the right measurements, to arrive at a fair market value.
Reasons To Seek Business Valuation Services
Businesses may need a formal valuation for a variety of reasons, including:
- Financial reporting: goodwill impairment testing, purchase price allocation, and stock options
- Tax purposes: S corporation elections, carried interest transfers, bank loans, property taxes, and nonqualified deferred compensation plans
- Mergers and acquisitions
- Strategic planning
- Business restructuring: buy/sell agreements, partner or LLC member retirements and admissions
- Dispute resolution/litigation: divorce, shareholder disputes, fraud and forensic accounting
The reason for performing the valuation will also help to determine the valuation approach and metrics used to establish value; a professional business appraiser has the experience and knowledge to choose the appropriate approach and measurement tools to fit the purpose of the valuation.
The three valuation approaches used in establishing fair market value for businesses are:
- Cost: The cost approach represents the floor value, or what the assets of the business would bring if it were to be liquidated rather than sold. Typically, a successful business is worth more than just its accumulated assets. In addition to physical assets such as buildings, equipment, furnishings, and inventory, operational businesses have an established customer or client base, workers who are trained for specific jobs, and other things of value that are less tangible than physical property; none of these intangible assets would have value in a liquidation. For this reason, the market and income approaches are more commonly used for businesses with significant intangible assets.
- Market: Analysis and comparison of businesses similar to the Subject business are the basis of the market approach. This is analogous to the comparables approach used in real estate appraisals, in which recent sales of similar properties provide a good estimate of the “going rate” for properties of about the same size and condition. As in real estate appraisals, the appraiser makes value adjustments to account for differences in the characteristics of the Subject business and other similar businesses offered for sale or recently sold.
- Income: This approach is based on the premise that a business’ current value is equal to the present value of future cash flows it will generate. The income approach is based on the expected return versus cost of investment, the amount of time required to realize that return, and the level of risk involved.
The most appropriate valuation approach depends on several factors: the purpose of the appraisal, the information available to the appraiser, and the nature and characteristics of the business itself. (Tweet this!) For example, valuation of a large multi-national company will be more complex and may require a different approach or multiple approaches as compared to that used for small business valuation services.
Professional valuation services tailored to your company’s unique needs
Whatever the reason for your company’s need to seek a valuation, Valentiam has the expertise to provide you with an accurate and defensible appraisal. Get in touch to learn more about our business valuation services.
Topics: Business valuation
How much is a business worth? It depends on the standard of value. Here are the four business valuation standards and the contexts in which each is used.