When selling a business, the most important question needs to be focused on the actual value of it. A certified business valuation can range in complexity. It could be a simple calculation or one that evaluates both tangible and intangible factors, giving you a more in-depth evaluation. Unfortunately, a single business valuation formula won’t work for all businesses under all circumstances. Usually, business valuation can’t be performed in the “right way”. For example, accountants may look at the figures in one way, while the brokers may look at them in a different way. A Certified business appraisal is crucial for a company to be valued correctly. Here are a few reasons to consider this service:
You need it for Reporting
In case you need to report the assessed value of the firm to investors. It usually takes place on a quarterly or yearly basis. This method offers economic health of the firm, thereby enhancing the investors’ confidence.
You need it for Fund Raising
In case you need to get funds for your business, you would require the appraisal report. It’s required by both banks and other options that consist of crowd funding.
You need it for a Merger or Acquisition
If you decide to merge or sell your business, a well laid out appraisal report of the complete business is necessary. It’s the first crucial step in the complete process of selling. This will in turn help you effectively negotiate a good price.
You Need to Achieve Seed Capital
In case you are planning to initiate a start-up, you will need to assess the value so that investors have a purpose to raise funds. A business appraiser will value the business based on future financial potential and not current economic value.
You Need to Issue ESOP to Employees
When a business wants to offer ESOP (Employee Stock Options), it must have the valuation done. This will help decide the shares employees will receive each year.
You Need It for Litigation
When facing any form of dispute on company assets, it is essential to have a better valuation report. It may be impossible for the insurance to cover the loss if the firm is sued and suffers a loss. It will be easier to decide and settle the case when a valuation report exists. It will determine how much the selling assets value.
In the end, a certified business valuation is essential for many purposes; also make sure you get a report from an expert business appraiser.