Business Valuation
Do you know what your business is worth?
We do.
Many business owners leave a substantial amount of money on the table when they sell. For that reason, the valuation process is a true asset to the business owner and a thorough, professionally prepared analysis is critical to a successful sale.
This is where ABI excels. We can:
- Identify key value drivers, major strengths, and, more importantly, major weaknesses of your company.
- Solve both obvious and hidden problems prior to the selling process.
- Determine the best selling price.
- Values determined by general multiples or rules of thumb may be too high or too low.
- We expect buyers to be sophisticated and experienced – they will conduct a rigorous analysis of your company even if you have not.
What is Your Company’s “Value”?
A typical business has two values: “academic” and “fair market”. The academic value is derived from a formula based on hard assets, cash flow, industry averages, and multiples. The fair market value takes those items into consideration but focuses on what buyers are really willing to pay in today's market.
But only one value really matters: what someone is willing to pay for your business!
Specific Valuation Services
ABI offers two solutions to evaluate your business:
- Opinion of Most Probable Selling Price (MPSP) Report
- Certified Valuation (available in three types):
- Calculation of Value
- Complete Appraisal - Summary Report
- Complete Appraisal - Self Contained Comprehensive Report
Please contact us for a price quote or for assistance in determining which report is best for your needs.
Ultimately, your business is worth whatever a buyer will pay you. ABI’s valuations will give you clear insights into the potential value, but there is no guarantee until a potential buyer makes an offer.
Opinion of Most Probable Selling Price
ABI will perform this analysis and the report will be less than 20 pages in length. It will suggest a range of most probable selling prices, assuming the sale of 100% of your company. It will employ various methods within the Asset, Income and Market Approaches to valuation and provide a summary discussion. The MPSP report is not USPAP compliant. Upon completion, we will review it with you as a foundation for establishing a likely selling price for your company and to assist you in understanding the key value drivers. This is the least expensive report and is designed to assist business owners who are considering the sale of their business, or where a formal report is needed (for situations such as litigation or IRS filings).
Once we receive complete information, you can expect the final report in around 7-10 days. Contact us for a price quote or if you have any questions.
Certified Valuations Provided by GCF Valuation
We offer different valuations depending on the size of your business and purpose. Two of the most common reports are the Calculation of Value and Complete Appraisal - Summary Report. These are both limited scope reports meaning they are not USPAP compliant. If your report may be used in litigation, a USPAP compliant report will most likely be required. These reports take anywhere from 2 weeks to 2 months to complete (once we understand your need, we can provide a more specific timeframe). We offer this service through GCF Valuation, a firm that services lenders, business brokers/investment banks and law firms. The analysts they employ only perform valuations, and are among the most highly credentialed experts in their field. Contact us for a price quote or if you have any questions.
Calculation of Value
Although USPAP has eliminated language referring to “Limited Appraisal”, the American Institute of Certified Public Accountants (AICPA) recognizes a “Calculation of Value” also known as “Value Calculations”. A calculation of value is NOT an appraisal because the appraiser is not coming to a “conclusion of value”, but merely a “calculation of value” based on a limited amount of investigation and due diligence. Although a Calculation of Value does not meet USPAP or IBA Standards, it can be a very valuable tool for business owners or professionals. Typical uses are as follows:
- Sale of a business
- Estate planning
- Business planning
- Developing a “preliminary” value for litigation matters
- Any matter where an “initial” or “calculation” of value is acceptable
Complete Appraisal – Summary Report
Although USPAP and the American Society of Appraisers address only a single format for written reports, many practitioners offer a “summary report”. The Institute of Business Appraisers acknowledges this report in IBA BV Standard 4.1 and notes that “By its nature the letter form of report is an instrument of brevity. It should contain at least a summary of the material factors that led to its conclusions, but is usually intended by the parties [to the appraisal engagement contract] to reduce the normal appraisal burden of writing a comprehensive report, and thereby allow the client to realize some economic benefit. However, the appraiser is still required to perform materially the same investigation and analysis as would be required for a comprehensive report and maintain in his files the workpapers necessary to support the conclusions stated in the letter form report.” Our summary reports are usually between 30 and 60 pages and are typically used for the following purposes:
- Merger or acquisition
- SBA or conventional financing
- Estate tax or gifting purposes
- Any matter where the intended users are “familiar” with the subject to be valued
Complete Appraisal – Self Contained Report
This is a formal presentation of the value of a business in a self-contained written report. If a valuation has the potential to go to court, or if the report needs to be reviewed by others, such as the IRS for tax implications, this type of report explains in full detail how the value was derived. Uniform Standards of Professional Appraisal Practice (USPAP) and American Society of Appraisers (ASA) address the above as a “Comprehensive, Written Business Valuation Report”. The Institute of Business Appraisers (IBA) addresses the above as a “Formal Written Report”. Typical uses are as follows:
- Litigation support
- Large, complex transactions
- Initial implementation of an Employee Stock Ownership Plan (ESOP)
- Any matter where there are many “intended users”
Contact ABI Business Sales today and we can help determine which report is best for your needs.
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