Business valuation experts assess a company’s value using their expertise in areas such as accounting, finance, market analysis, and economics. Typically, they undertake a valuation for a certain purpose, like a business merger, sale, or acquisition. Many business valuation services include analyzing financial statements, market trends, and economic conditions. Also, they review sales forecasts, industry data, and the competitive position of a company in the industry or market.
When to Hire Business Valuation Services
Whether you are a business owner or investor, hiring a business valuation expert is important under some circumstances, such as the following:
- Business sale and purchase. If you are considering selling your business, you must hire a business valuation expert to help you determine the true value of the business and make sure you get a reasonable price that reflects your hard work. Likewise, if you want to purchase a business, the expert can explain the target business’s true value and negotiate a good price.
- Financing. At some point, you will need additional capital for growing your business. When you seek financing, you will need to provide lenders with a business valuation that they will use for assessing and approving your loan. The same is true when you are looking to refinance an existing debt facility.
- Insurance. If you are like other business owners, you may purchase insurance policies to reserve your company’s value. But you must review these policies regularly to make sure you get enough coverage when the unexpected happens. Your business and assets must be valued to make sure they are insured for the right sum.
- Disputes. In business, disputes and disagreements can occur between partners, investors, and shareholders. When disputes do not get resolved, the disputing parties may part ways. When this happens, the business may need to be divided or dissolved, sold, or brought out by one investor. Thus, having an accurate valuation of the business allows every party to be treated fairly and avoid costly legal battles.
Choosing a Business Valuation Expert
Before you decide on the expert to determine the true value of your business, you must consider some things. First, you must look for a qualified valuation expert who has a strong educational background in related areas. Also, you should work with an expert who will explain their analysis and answer any questions you may have. Lastly, find a valuation expert who utilizes a transparent method for valuing your business that aligns with your specific needs.