Business valuations are needed for a variety of purposes. Some of them are required, such as with a gift tax return or court requirement for probate or divorce. Some of them are sought out to inform the owner of business worth before selling. And some of them are because it makes good business sense as a management tool.
I have a CPA who does my taxes that says he can just "give me a ballpark" figure for now. If you have heard this suggestion you may want to consider your alternatives and the importance of what you are trying to do. Typically, the business is the most valuable asset the business owner has. Not spending a little bit more for a professional opinion can be self-defeating. If the "estimate" is too high, so maybe your tax, an incomplete sale transaction that is walked away from by the buyer, or is not supported by the bank for financing. And the opposite of this would be true if the estimate is too low.
Experience. As a credentialled appraiser we have been involved in preparing many different types of valuations and can bring that experience to bear on the next project. Education. As a credentialled business appraiser we have a much greater breadth of knowledge due to training and the continuing education required.
It sometimes occurs that a client comes to us thinking they need a business valuation when what they actually need is something else. When you first talk with us, we appreciate you being as thorough as possible with your needs and the purpose of the report. Explain to us what it is for and why. Is it tax related? Divorce? Sale transaction? Probate? Each of these purposes will demand a different type of report. Important note here... a good appraiser will ask you a lot of questions about your situation before determining what type of report you need.
The process from the client's perspective is fairly straightforward. First, determine the type of valuation needed and the scope of work that will be required of the appraiser. Second, assembling the documents. If you are organized this can be easy, if not this can be a bit of a task. Typically needed are financial statements, tax returns, receivables lists, payables lists, debt documents, payroll information, fixed asset information, and a list of perks for the owners. Again, if you are organized or have an accountant that takes care of this information, it will be a very straightforward task. Third, answering questions that will come up during the process. And fourth, review the draft report.
A business owner should get an appraisal once a timeline for selling is definitive in their mind. If you are thinking of selling in 5 to 10 years, then it is best to get one right away to see where you are at for value and get an idea of what you can do to improve if possible. After the first one, a second one-two to three years later would be a good idea to see if you are on track. And then when you are getting close to selling get one more. What this does is establish a pattern of value. Hopefully, it will be increasing with time. If not, it will give you the chance to make adjustments to improve value. Laird Valuations offers a break in the price for those who elect to have a regular valuation done.