Business valuation is vital for any organization, whether a small business or a large one. It can help you provide potential buyers and investors with an accurate map of your company and help your business grow and compete in the market. Still, so many people ignore this or do not hire the right professionals for the job.
Hiring the right people for business valuation services can truly take your business from zero to a hundred in a matter of a few months. If you still doubt the process, clarifying your doubts might help. Clients have various questions, and this blog will answer the most commonly asked ones.
Answers to common business valuation questions
- When should I get a valuation for my business?
A valuation helps you understand the current actual value of your business. Therefore, it should be done every time you want to know how much your business is worth. Estimates do not always work; you will require accurate numbers when looking for potential buyers or investors. Here are some situations when you may need to get a valuation:
When buying or selling a business.
During a divorce.
Entering into a buy/sell agreement.
Real estate or tax issues.
Mergers or acquisitions.
As a shareholder of the company.
- How long does the valuation process take?
How long it takes to value a business depends on several factors. For starters, a small business valuation will take less time than a larger one for obvious reasons. Generally, a professional usually takes 60 to 90 days to provide an accurate number and other background information.
- Is it possible to value intangible assets?
When it comes to valuing a business, two types of assets come into account: tangible and intangible. Tangible assets are physical, while intangible assets are non-physical but still provide financial benefits to the owner. Examples are license agreements, trade names and trademarks, copyrights, patents, and other intellectual property.
- How many kinds of valuations are there, and what are they?
A professional does various valuations to get an accurate financial picture of your company. Here are some methods commonly used:
Owner benefit valuation
Multiplier or market valuation
Capitalization of income valuation
- How much do valuations cost?
Just like the time taken in the valuation process varies from company to company and depends on several factors, so does the cost. Again, for obvious reasons, small businesses may have to spend less on valuation than larger ones. Costs may start from $1000 and reach up to $10,000 depending on the size of the company and the method used.