There are many reasons why you might want a business valuation: selling a business, buying a business, transfer of business to a new entity, partnership break up, divorce or shareholder dispute. Buying a business is a big deal, made bigger by making the wrong choice. A valuation will assist with making an informed choice about an offer price. When selling a business it’s equally important to get an appraisal so you understand the true value of what you have built and can properly prepare your business for sale.
Teaming up with the right accountant who can provide accurate and independent advice is essential before purchasing, selling or making any significant ownership changes to your business.
The business valuation process varies somewhat according to the nature and size of the business, however the general steps involved are these:
- Interview – establish the reason for the valuation and advise on best approach and method.
- Investigation of the business – thorough inspection of all relevant documents and data – every little bit of information matters.
- Analysis of data – establish profitability and observe levels of risk associated with the business.
- Value determination – using appropriate valuation methods, and based on financial and operational information gathered, an opinion of the business value is established.
- Valuation report – a full report outlining processes and justifications is delivered.