Most people require the services of a business valuation company at one point or another. If you are a corporate head who wants to retire by selling off your company, you would need a valuation to increase your asking price. A professional valuation would also come in handy for the homeowner who wants to sell off his property or the shareholder who wants to cash in his interest. Valuations are therefore a crucial part of any business. However, sometimes you may feel as if a professional valuation may not justify the cost. Why hire a professional when any appraiser can do the job? Why should you choose a Certified Professional Valuer’s estimation over your own or an unlicensed company’s when you want to sell your stake interest? These are the questions we will be looking at in this post.
Importance of using Licensed Valuers
Here are several reasons why using a licensed valuer is important to you and your interest:
The valuation adds value to transactions
A valuation from an unlicensed business valuer and a registered one do not carry the same weight in the eyes of potential buyers and investors. Having a professional determine what your company’s market value is worth adds credence to your asking price that you would otherwise not have. It lets other parties know that the estimation of your firm’s worth is not only accurate but also informative and transparent enough to use in conducting business. This guarantee boosts the value of any transaction you make referencing the valuation.
Sellers are not the only ones who get the fair market value benefit from valuations. A merging company can increase its negotiation power during a merger if it is discovered that it had undervalued its assets.
A professional valuation can be used for decision-making
When do you think about getting a valuation for your business? Most times the answer to that question is to make a sale, engage in a merger or pass on interest. Getting a business valuation from a registered firm, in this case, would enable you to carry on with the decision/ transaction. Without a valuation from an independent appraisal firm, you would have incomplete data that would hinder you from making proper decisions with regard to your business. You would not know how much capital to ask investors for or what amount of money to demand from a potential interest buyer.
It saves you from losses and suits
When an investor infuses money into your business, he expects returns from his investment years down the line. Similarly, a person who buys shares from you expects to have future earnings. Insurance companies offer certain policies to businesses that are contingent on the value of the business. In these cases, a professional business valuation provides a statement that the value you have assigned to your interest is true. Without it, you would be liable for suits and any related losses should the investments not generate revenue or the insurer back out of payment for inaccurate estimation of value. Granted, you could still make losses with a valuation from a licensed valuer, but not as much you would without the estimate. A business valuation as such could save you consequential amounts of money.
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.
Liability Limited by a scheme approved under Professional Standards Legislation
