Whether you are selling your business or taking one on, you will want to make sure you have a valuation in place before moving forward. That being said – how exactly do you get a business valued?
This piece is going to offer some top tips on how you can get a business valued accurately so you can move forward with your plans.
Read on to find out more!
Why Get a Business Valued?
Getting a business valued will help you know exactly what you should be paying for and what exactly it is that you are paying for too. A valuation of a business will give you many benefits, including but not limited to:
- An overall view of the health of the business. Vitally important for anyone considering buying a business. You do not want to buy a business that will flop within the first year due to bad prior history.
- It allows you to have a concrete price tag on your business for any last-minute sales or for those who are taking over.
- It can give you information to provide investors or lenders with if you need additional financial support.
- It can support you in selling shares of your business.
Choose the Valuation Method You Want to Work With
Did you know there is no one set way for you to get your business valued? This is why it is important that you are able to choose a method that works best for you and your business. Make sure that you do not get ripped off by going to a trusted professional that values businesses in your sector. For example, if you have an accountancy firm you are thinking about selling, then make sure to contact a company who specializes in accounting firm valuation. This is the best way to get the most accurate valuation for your specific business by a company you can trust.
In general, a valuation of a business will include the following:
- Asset valuation – Both tangible and intangible assets will be included in this, such as actual profit, shares, land, equipment, and anything else that is worth something.
- Discounted cash flow – A method that values a business based on its future earning potential.
- Best practice valuation–Focuses on the practices of the business to determine value.
- Entry valuation – Asking if you started your business from the bottom up, how much would it cost?
- Comparable analysis– Assessing the valuation of businesses that have been sold recently that are similar to yours.
Conclusion
There are several ways that you can get your business valued, and each some with their own pros and cons. It is important to do your research, so you are able to make the right choice for you and your business, and do not skimp on getting a professional’s advice. After all, that is their job!
If you are unsure about your choice, then ask for a second opinion, and make sure you only work with people you trust and do not rush into anything that might make you feel uncomfortable. Good luck in selling your business!