Looking for investors for your business? Get an independent valuation first.
The question of how much a business is worth will always come up at one point or another. That is a universal fact for all business owners. Regardless of the size, enterprises will always be held accountable for their performance and worth by their stakeholders and in some cases, even by potential owners. Informal business valuations, where a firm owner considers the firm’s market cap, income or asset value in determining the firm’s worth are generally acceptable valuations when dealing with minor business agreements. However, if you’re looking for investors for your business, getting an independent valuation is an ideal way to value your business.
But how do businesses get formal valuations from independent appraisers? We look at how to do that here.
Get Your Financial Documents in Order and On Time
Typically, appraisers conduct valuations and submit their reports within a month or a month-and-a-half of receiving all of a company’s financial statements and asset information. When you know that you’re going to appraise your business, organize all your papers. This makes handing them over to the valuation company, investment banker or Certified Public Accountant handling your case faster and more convenient. Once the valuation firm has your details, it can begin the valuation process for your company.
Engage the Service of an Independent Valuation Party
Once you have organized your financial data, preferably dating back three to five years, reach out to the firm or consultant you want to handle your case. At this juncture, you can employ the use of a lawyer to iron out the details of the contract. Some valuation firms will require you to make payment before the commencement of the process, so be sure to do your research before settling on a specific one. Once you decide on a valuation firm, have them communicate a fee estimate and negotiate for the one you’re comfortable with. Additionally, let the firm send out a consultant to conduct a due diligence visit. Ask questions about the procedure, which financial documents the firm would need, confidentiality clauses among others during this period. After reaching an agreement, you can hand over your documents and statements to the valuation party.
Choose a Valuation Method
Depending on what you need the valuation for, a valuation firm could conduct its valuation differently. Look at which valuation method your competitors are going for before settling on one for your enterprise. Valuation methods include the informal valuation methods in which case the appraiser would come up with a draft of your business’ worth. The formal valuation, which takes longer and is usually more acceptable, takes longer and is only concluded after the appraiser reconciles the books to come up with an accurate figure.
Receive the Valuation Report
Once the primary scrounging process is done, a valuation firm will prepare a report of your finances. This report will outline the accurate and independent business valuation of your firm.
If you’re thinking of making a major career change from entrepreneurship, selling your business or just assessing your place as a company within an industry, getting an independent valuation could aid in the process, so get one today!
You can get both formal and informal business valuations from our Business Valuers. Choose your preference and speak to us today.
Mathieu Paul
Director – Business Improvement
P: +618 6315 2755
E: enquiries@wabusinessvaluations.com.au
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
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