What is it Worth?

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Getting the true market value of a prospective business is best obtained by using a fully qualified and experienced business valuation specialist to prepare a market valuation assessment of the

• company assets
• location
• economic strenth
• market position
• goodwill
• and other factors.

Without it, the buyer and seller will likely end up in long, tedious negotiations that can delay the closing of a sale and may leave a significant amount of value on the table.

Using the NACBB Approach:

Many business owners use tax returns or financial statements prepared for tax returns as a basis of determining value.

Tax returns reflect an understatement of "True Value" because they report depreciated assets and IRS deductions.

In addition, the business goodwill or name, which represents the market value of the company, is not a consideration for tax purposes and is often not reflected. What you have is a "book value" that is lower than the true "market value" of the business.

Book Value vs. Market Value

A market value presentation of a business often reflects an increase in assets and equity:

 

 

Determining the Right Valuation Method

The professional valuation professionals we have on staff are able to provide the following style of valuation reports:

• An Value Assessment Report
  provides an approximate indication of value based upon the performance of limited procedures agreed upon by the appraiser and the client. The results can be expressed as a single dollar amount or as a range. The valuer will only consider limited relevant information and will perform only a limited analysis. This type of report is generally used by smaller companies.
  
  
• A Limited Scope or Market Valuation Report
  provides a fair market value opinion. It is a more extensive analysis: Asset, income and Market Approaches are considered. Market methods are based on generic group multipliers. Discounted Future Cash Flows and Discounted Future Earnings methods may be available; sometimes historical methods only.
  
  Public company comparisons are non-existent, or at best, very limited. A limited review of business risk factors is performed and the competitive environment is examined, and there is an abbreviated company description. This is the most common report to support a business sale and the results are often used to support the pre-approval of a business for Commercial financing, thus limiting your need to hold a Seller's Note!
  
  
• A Comprehensive or Self Contained Report
  provides an extensive analysis. All valuation methods are applied as applicable. Comparable sales transactions and multipliers for the Market methods are very specific to the Company's business. Public company comparisons are available and used when needed. A comprehensive review of the business risk factors is undertaken, a detailed description of the company and its positioning is provided, and a review and assessment of the prevailing economic conditions in the specific industry is undertaken.

 

Certified Business Valuation Services

There are many different firms offering business valuation services — many CPA's also offer this as a service. There are only a few, though, that offer you the quality of service and the track record to make the investment worthwhile.

NACBB has on staff qualified and credentialed Business Valuation Experts who can determine a true business value and present it in a high quality professional report. A valuation from a Certified Valuator reflects the "Fair Market Value" of a business based on recast assets, cash flows, the company history and potential, the economy and industry sector and business values in today's market.

This represents the true economic value of your business. Give us a call for further consultation:

NACBB
1-804-527-1103

or e-mail your questions to:
info@nacbb.com