Guide to Valuation Advisory Services

Know your company's worth by consulting business valuation advisory services

By Jenni Simcoe

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Knowing what your business is worth is invaluable. Before you take advantage of valuation advisory services, you’ll need to collect three basic pieces of information that are used in a small business valuation formula. First, you’ll need cash flow analysis reports. Second, you’ll need to identify your assets. Third, you’ll need a comparative analysis of the selling prices or stock values of like companies.

Business valuation advisory is beneficial for a number of reasons:

If you’re thinking of selling your business. Valuation advisory services can help you pinpoint a fair selling price.
As a measurement tool to help grow your business. A valuation advisory indicates your company’s current worth, which can help you set goals and find opportunities for growth.
To be prepared for problems that may arise. Small businesses and partnerships are especially vulnerable when partnership issues or marital dissolutions occur so hiring valuation advisory firms to figure out your business value prepares you for divvying up assets.
To attract investors. Before anyone will invest capital in your business, they’ll expect you to have had a valuation advisory to know the company’s worth and its financial outlook.
When regulations mandate valuations. If your company is publicly traded, regulations require a periodic business valuation advisory.
To use as a comparative tool. Hire business valuation advisory services to find out where your company stands financially compared to competitors.
To establish an ESOP plan. In order to let your employees share ownership in your business, you’ll need to use business valuation advisory services to figure out percentages of ownership.
To enable you to make fast decisions on buying, selling and mergers. If an opportunity presents itself to buy, sell or merge your business, you’ll need to move quickly while the offer is fresh. This isn’t the time to look for business valuation advice.

Action Steps
The best contacts and resources to help you get it done

Choose valuation advisory software for help calculating business worth

With a small business, you can often take the DIY approach to finding your company's value thanks to business valuation advisory software. Before you purchase valuation advisory software, find out how detailed the reports are and what information you'll be required to input for results.

I recommend: MoneySoft makes Corporate Valuation Professional software, used in business valuation advisory by financial valuation advisory companies and valuation accountants to create financial analysis, detailed projections, graphing and report writing functions. MBAWare offers multiple software applications to assist you with your large or small business valuation formula. Express Business Valuation provides a simple 19-step formula to accomplish the business valuation process. Business Valuation Report Writer assists you in creating a valuation report from your existing financial spreadsheets. ValueAdder software is a good choice for small business owners who want to write viable purchase proposals to sell their businesses. For more vendors, check the Business.com directory for valuation advisory software.

Find valuation advisory consultants to help you with the process

If you are doing a business valuation in order to sell your company, attract investors or start public trading, you'll need a very detailed valuation report. The best option is to hire one of the many valuation advisory consultants that specialize in your specific industry. Hiring valuation advisory consultants can be pricey, but well worth the investment when accuracy is key.

I recommend: Erickson Partners specializes in helping energy, real estate holding companies, insurance and high-tech firms to appraise their company’s worth. Fair Market Valuations has more than 250 locations nationwide and brokers who will come to you to perform valuation advisory services. After the business valuation is complete, they also offer brokerage services to take your business to the market stage. The American Society of Appraisers database allows you to search for valuation advisory consultants by geographic location. A listing of valuation advisory consultants is also available at Business.com.

Use online tools that provide business valuation advisory services

Another way for small businesses to save money from hiring expensive valuation advisory consultants is to take advantage of their experience by using online tools they've created.

I recommend: C&S Associates offers online business valuation advisory tools to assist you in the business valuation process. The five different levels of tools are based on what you need and why you are performing the valuation advisory. Woodbridge Group Inc. offers an online free snapshot valuation of your business based on your basic financials.

Tips & Tactics
Helpful advice for making the most of this Guide

A valuation advisory can be a good tool to provide to a board of directors, investors or partners--especially when profits are down. Showing the value of the business may boost morale and allow you to refocus your business goals.
You may think you don't need valuation advisory services because you know your company's worth based on your yearly tax return and financial statement. But most businesses try to expense as much as they can to reduce taxes, so the financial snapshot from these documents isn't a true picture of your business's worth.
Decide which small business valuation formula you will use. Valuation approaches include asset, income, market comparable and other approaches.

The official source of Valuation Advisory Services is
the Valuation Advisory page at Business.com

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