Business valuations serve many purposes. They can be used for internal understanding of business worth for management, investors and equity holders. More importantly, they are used to assess viable businesses looking for strategic merger & acquisition opportunities. A well-produced business valuation can provide a 30,000 foot view of how the business operates. It also provides a granular look at the financial standing of the company. There is no silver bullet for performing a business valuation. Acquirers and internal managers alike have different methods they like to use for valuing businesses and business assets. For that reason, we take a multi-faceted approach to business appraisals and business valuations by using the following methods.
Regardless of the type of business you operate, there are many differing nuances that need to be taken into account when valuing the company as a going concern. When it comes time to value your business or perform any business planning function relative to company valuations and appraisals, please give us a call.
Enterprise business valuations are necessary for both internal and external business planning, assessment and analysis. Moreover, a properly valued corporation can also set proper expectations for shareholders when it comes time to liquidate business assets or perform any M&A activity.
Multiple methods of professional valuation exist for understanding the intrinsic value of a business as a going concern. Each respective valuation method can help to represent business value from an entirely different perspective. In some cases, depending on the industry, customer landscape and overall business structure, one method is keenly favored above others as a more “representative” view of the business worth. When performing a valuation on any business, we provide a view from as many as six different methods, using various “rules of thumb” and benchmarks to ensure shareholders obtain a more holistic view of valuation. In addition, proper audits by ourselves or other outside consultants ensure various aspects of the business are properly represented.
For business buyers, a valuation is an essential component of the buying process. The quote by investment magnate Warren Buffett fits well:
Price is what you pay, value is what you get.
Overpaying is one of the greatest risks investors face when viewing other business as targets for acquisition. Valuations can help to at least mildly mitigate such risk. Here are a few of the valuation methods we utilize in our consulting and assessment work.
Our primary services include valuations for mergers and acquisitions, including financial and strategic valuations for pre and post merger integration as well as buy-side M&A due diligence. We use multiple generally accepted methodologies to establish a viable value range, giving expert understanding and insight to your corporate value. We also provide expert valuations and appraisals for the following.
Generally Accepted Accounting Principles (GAAP) has undergone significant transformations to its fair value reporting standards. Acquisitions are accounted for under purchase accounting rules for which acquired intangible assets are identified and valued separately. GAAP outlines five general categories of intangible assets. Intangible assets with an indefinite life and any remaining goodwill are not amortized, but rather are subject to periodic impairment testing. Goodwill impairment testing requires the valuation of a company’s reporting units.