Business valuation professionals analyze your company’s financial history, market position, and growth potential to determine its true worth. These specialists translate your financials into clear valuation reports, helping reveal hidden value and establish realistic price expectations for your exit planning.
- Our Mission
Understand how valuation works in practical terms, to turn complex selling concepts into clear knowledge throughout the exit planning journey.
Business valuation concepts transform industry jargon into straightforward, accessible information, making it easier to understand what drives business value.
Knowledge about business valuation creates opportunities for informed decision-making, putting more control in owners' hands.
- Valuation Methods
Understanding different valuation approaches
Income-Based Valuation
Income-based valuation examines what your business generates in profits and cash flow. This approach projects future earnings and calculates their present value, reflecting what buyers actually purchase - the ongoing income stream. Many small businesses sell based primarily on this method, with multiples varying by industry. Understanding this approach helps owners identify opportunities to boost profitability before selling.
Market-Based Valuation
Market-based valuation compares your business to similar companies recently sold. This approach examines actual transaction data for businesses with comparable size, industry, and financial performance. The method reveals what real buyers paid for businesses like yours, providing practical benchmarks. Reviewing these comparables helps set realistic price expectations and understand how your business measures against others in the marketplace.
Asset-Based Valuation
Asset-based valuation calculates your business worth by examining what it owns minus what it owes. This method tallies tangible assets like equipment, inventory, and real estate, plus intangible assets such as customer lists and intellectual property. For asset-heavy businesses, this approach provides solid grounding for negotiations, creating clarity when discussing terms with buyers.
Valuation Process
Getting to Know You
Professional valuators begin by gathering essential business information and understanding your exit goals. This discovery phase explores company history, operations, industry position, and reasons for selling. Sharing complete information during this stage creates the foundation for an accurate valuation that reflects your business’s true worth.
Gaining Clarity on Your Finances
Valuators analyze financial statements, tax returns, and cash flow patterns from the past 3-5 years. This deep dive into your numbers reveals trends, identifies normalized earnings, and uncovers financial strengths that might boost value. During this phase, anomalies and discretionary expenses are adjusted to show true earning potential.
Applying Valuation Methods
Valuation professionals select and apply appropriate methods based on your specific business type and industry. They calculate value using multiple approaches – examining earnings, market comparables, and assets. This methodical process weighs each factor’s importance, creating a value range that captures both tangible assets and future earning potential.
Finalizing and Applying Insights
The completed valuation report provides more than just a number – it offers critical insights for exit planning. Business owners gain clarity on value drivers, improvement opportunities, and realistic pricing expectations. This knowledge strengthens your negotiating position and helps you evaluate offers fairly.
