What’s your business worth?

The cost of not getting a good valuation when needed (or appropriate) far outweighs the cost of having one done.

An article written in Entrepreneur Magazine correctly notes that the cost of data at business-specific levels is expensive.  This is part of why Business Valuations can be costly, including the specialized training required to prepare an accurate valuation.  Most small businesses cannot afford to have that type of talent on payroll waiting for the once a year valuation need to arise.

Business owners can also shop around for a valuation professional that meets their level of need.  Do they need a big-name firm with national recognition to do a quality job on the valuation?  Maybe not.  That said doing one’s homework through background checks and referrals, and learning what you can about the professional is always wise.

Hiring a valuation professional who has prepared a variety of reports, for a variety of industries may give the business owner someone who can envision possibilities (good and bad) beyond what is just right in front of them.  It can help them see opportunities to take advantage of any problems before they come up.  Seeking to work with a valuation professional who has credentials associated with the profession is a good place to start.

Three credentials to consider are ABV, CVA, and ASA.  These are the three most commonly recognized in professional circles that prepare business valuations.

One last comment regarding the cost of the valuation.  There are different types of reports with differing costs and degrees of complexity associated with each.

  • Conclusion of Value is the most thorough.  It takes into account the economy, the industry impact, and events, business background and analytics, formulation of value and conclusion.  Detailed and complicated to develop.  {This is the expensive one!}
  • Calculation of Value is far less involved yet with providing the formulation of value and analytics that you want as part of the report.  Because it leaves out the other “parts” that make a full report a full report, it should be noted that the value calculated may be different than the concluded value of a full report.

Laird Valuations is located in Grand Rapids, Michigan, and services the western half of the Lower Peninsula. James Laird, CPA, CVA, has provided management counsel and valuation services to business owners since 2004.