Valuation Services Explained: Types, Uses, & Costs

Sep 16

It’s easy to view a business valuation as just another business expense. But a well-executed valuation is one of the smartest investments you can make in your company's future. The cost of guessing your company's worth is far higher than the price of a professional report. Think about the value lost in a poorly negotiated sale, the penalties from an incorrect tax filing, or the legal fees from a drawn-out partner dispute. Professional valuation services provide the clarity and documentation needed to avoid these pitfalls. This process delivers a significant return by empowering you to secure better deals, optimize your financial planning, and protect your most valuable asset.

Key Takeaways

Valuation is about clarity, not just a number: A professional valuation gives you an objective look at your company's financial health, empowering you to make strategic decisions based on solid data instead of gut feelings.
The "why" dictates the "how": The reason you need a valuation—whether for a sale, tax planning, or internal strategy—determines the specific methods used, ensuring you get a report that is truly useful for your specific goal.
Prioritize independence and credentials in a valuation partner: For a valuation to be credible in high-stakes situations like tax filings or legal disputes, it must be performed by a certified, third-party expert who can provide an unbiased and defensible assessment.

What Are Valuation Services?

At its core, a valuation service determines the economic worth of a business or an asset. Think of it as a detailed financial check-up that gives you a clear, objective answer to the question, "What is this actually worth?" This isn't just about pulling a number out of thin air; it's a meticulous process that analyzes everything from your financial statements and market position to the broader economic environment. For business owners, entrepreneurs, and investors, a professional valuation provides the clarity needed to make sound strategic decisions, whether you're planning to sell your company, buy another one, or simply understand your financial standing.

Valuation services are essential for navigating critical business milestones. They provide a defensible and well-supported opinion of value that can be used in negotiations, for tax and financial reporting, or during legal proceedings. Instead of relying on gut feelings or industry rumors, you get a concrete figure backed by proven methodologies and expert analysis. This empowers you to plan for the future with confidence, secure fair deals, and ensure you meet all your compliance obligations. It’s about replacing uncertainty with a clear, data-driven understanding of your company’s value.

What's Included in a Valuation?

A professional valuation is much more than a single number on a page. The process typically involves several key steps, starting with initial consultations to understand your specific needs and the purpose of the valuation. From there, an expert will conduct a thorough analysis, which can include creating detailed appraisal reports that estimate value, writing specialized reports to support those findings, and even reviewing appraisals completed by other parties. The final deliverable is a comprehensive report that not only states the value but also explains exactly how that conclusion was reached, providing a transparent and defensible assessment you can rely on.

The Types of Assets We Value

Valuation isn't limited to just an entire business. These services can be applied to a wide range of assets, both tangible and intangible. We frequently perform valuations for closely-held and family-owned businesses, but our work also extends to specific assets within a company. This includes physical properties like commercial real estate, industrial sites, and machinery. It also covers intangible assets, which are often the most valuable parts of a modern business. These can include things like brand names, patents, customer lists, and proprietary software. A proper valuation ensures every component of your business is accurately assessed.

The Professional Standards We Follow

A credible valuation must adhere to strict professional and ethical guidelines. This ensures the final report is objective, consistent, and defensible. Reputable firms follow established principles like the Uniform Standards of Professional Appraisal Practice (USPAP), which provides a recognized framework for appraisers. Furthermore, top valuation professionals often hold certifications from organizations like the National Association of Certified Valuators and Analysts (NACVA). These designations signal a commitment to rigorous standards of expertise, objectivity, and integrity, giving you confidence that your valuation is in capable and trustworthy hands.

Common Types of Valuation Services

When you hear the term "valuation," it’s easy to think of it as a single service. But in reality, it’s a broad field with different specialties, and the type you need depends entirely on what asset you’re trying to value. Think of it like visiting a doctor—you wouldn't see a cardiologist for a broken arm. Similarly, valuing a patent requires a different skill set than appraising a building.

Understanding the different types of valuation services helps you find the right expert and get the accurate information you need to move forward. Whether you're selling your company, planning for the future, or securing a loan, knowing what to ask for is the first step. Let’s walk through the most common types of valuations you’ll encounter.

Business Valuations

A business valuation determines the total economic worth of your company. This is the service most people think of when they hear "valuation," and it's essential for major transactions like a sale, merger, or acquisition. The process gives you a clear, defensible number for your business's value. It also does something more—it shines a light on areas that might be holding your company back, like underperforming assets or weak operational ratios. The cost of a business valuation can vary widely depending on complexity, but the clarity it provides is an invaluable tool for strategic planning and negotiation.

Real Estate Valuations

If your business owns property, you’ll likely need a real estate valuation at some point. This service appraises the value of physical properties, including commercial buildings, industrial sites, and even vacant land. These valuations are a critical part of many business activities. You might need one to secure a mortgage, appeal property taxes, handle estate planning, or navigate legal cases. A professional appraisal ensures you have an accurate and reliable value for your real estate assets, which is fundamental for sound financial management and making informed decisions about your property.

Intangible Asset Valuations

Some of your most valuable assets might be ones you can't physically touch. Intangible asset valuations focus on assessing these non-physical items, such as trademarks, patents, copyrights, customer lists, and goodwill. Valuing these assets is crucial for financial reporting, especially during a merger or acquisition where they can represent a significant portion of the purchase price. Because these assets aren't concrete, the process requires specialized expertise to produce clear and well-supported valuation reports that stand up to scrutiny from auditors, investors, and the IRS.

Equipment and Machinery Valuations

For many businesses, especially in manufacturing, construction, or transportation, the equipment and machinery you use every day are major assets. This type of valuation assesses the worth of these physical items, from vehicles and computers to specialized industrial machinery. Accurate equipment valuations are necessary for a variety of reasons, including financial reporting, securing loans, obtaining proper insurance coverage, and managing your assets effectively. These valuation services provide a detailed and supported appraisal of your equipment's value, giving you a clearer picture of your company's total worth.

When Do You Need a Valuation?

A business valuation isn't just a "nice-to-have" report you get once and file away. Think of it as a critical tool you can use at various stages of your business journey. It provides a clear, objective snapshot of your company's financial health and market worth, which is essential for making sound strategic decisions. Whether you're planning a major change, navigating a legal requirement, or simply want to understand your company's true value, a professional valuation gives you the data-backed confidence you need. It moves you from guesswork to a position of strength, ensuring you're prepared for whatever comes next.

Mergers and Acquisitions

When you're considering buying another company or selling your own, a valuation is non-negotiable. For buyers, it provides a detailed look under the hood, helping you understand exactly what you’re paying for and justifying the purchase price to investors or lenders. For sellers, it establishes a credible asking price. A thorough valuation also uncovers areas that might be dragging down your company's value, like underperforming assets or weak financial controls. Identifying these issues beforehand allows you to address them, strengthening your negotiating position and ensuring a smoother due diligence process.

Tax Planning and Compliance

The IRS often requires a formal valuation for specific tax-related events. This is especially true for estate and gift tax purposes. If you're transferring ownership of your business to a family member, for example, you'll need a defensible valuation to determine the tax implications. It’s also a key component in creating certain trusts and handling property tax appeals. Working with a certified appraiser ensures your valuation is accurate and compliant, which can help you avoid costly audits and penalties down the road. Proper tax planning relies on having a precise understanding of your assets' worth.

Financial Reporting

If your company follows Generally Accepted Accounting Principles (GAAP), you'll need valuations for financial reporting. Public companies and many private ones must report the fair value of certain assets and liabilities on their financial statements. For instance, when one company acquires another, the buyer has to allocate the purchase price to the assets acquired and liabilities assumed. This process, known as a purchase price allocation, requires valuing everything from equipment to intangible assets like brand names and customer relationships. Valuations are also needed for goodwill impairment testing and accounting for stock-based compensation, ensuring your reports are accurate and transparent.

Succession Planning

For many business owners, especially those with family-owned companies, planning for the future is a top priority. A key part of any succession plan is knowing what the business is worth. A professional valuation provides an objective estimate that can be used to structure a fair transition, whether you're passing the company to the next generation, selling to key employees, or creating a buy-sell agreement. This clarity helps prevent disputes among family members or partners by setting a clear, agreed-upon value for the transfer of ownership, making the entire process much smoother.

Dispute Resolution

Business partnerships don't always go as planned. When disagreements arise between shareholders, or in more personal situations like a divorce, an independent valuation can provide a clear path forward. An objective, third-party appraisal offers a credible and defensible figure that all parties can rely on. This is crucial in legal proceedings where the value of a business is a central point of contention. Rather than relying on emotional or biased estimates, a formal valuation brings facts and established methodologies to the table, often helping to resolve disputes more quickly and amicably.

Investment Analysis

Are you looking to raise capital, bring on a new partner, or make a major strategic investment? Before you do, you need a solid understanding of your company's current worth. A valuation provides the baseline you need to negotiate terms with potential investors and demonstrate the potential return on their investment. It shows that you're a serious business owner who understands your company's financial standing. This analysis helps you make informed decisions about equity distribution and ensures you're not giving away too much of your company for too little capital.

How Valuations Are Calculated

Figuring out what a business is worth isn't a one-size-fits-all process. There’s no single magic formula. Instead, valuation professionals use a few core methods to determine a company's value. Think of these methods as different lenses to look through—each one provides a unique perspective on the business's financial health and potential. The right approach, or combination of approaches, depends entirely on the specific business, its industry, and the reason for the valuation.

For example, a manufacturing company with a lot of heavy machinery might be valued differently than a software startup with mostly intangible assets. A valuation expert will analyze the situation and select the most appropriate methods to arrive at a well-supported and defensible conclusion. Understanding these fundamental valuation approaches helps you see the logic behind the final number and gives you confidence in the results. It’s all about using the right tools for the job to paint the clearest possible picture of value.

The Asset-Based Approach

The asset-based approach is exactly what it sounds like: it calculates a business's value based on the assets it owns. The basic formula is straightforward: you take the total value of the company's assets and subtract its total liabilities. The result is the net asset value. This method relies heavily on the company’s balance sheet to provide a snapshot of its worth on a specific date. It’s particularly useful for established, profitable businesses that have significant tangible assets, like real estate, equipment, or inventory. This approach gives a solid, foundational value based on what the company physically possesses.

The Market Approach

Think of the market approach like pricing a house. You look at what similar houses in the neighborhood have recently sold for. In business valuation, this method determines a company’s worth by comparing it to similar businesses that have been sold or are publicly traded. An analyst will look at financial metrics from these comparable companies, such as price-to-earnings ratios, to establish a benchmark. This approach provides a realistic, market-driven perspective on what your business might be worth in the current economic climate. It’s especially effective in industries where there are many comparable transactions to analyze.

The Income Approach

While other methods look at current assets or past sales, the income approach is all about the future. It values a business based on its ability to generate cash flow down the road. The most common technique here is the Discounted Cash Flow (DCF) analysis. This involves projecting the company's future cash flows and then "discounting" them back to what they’re worth today. After all, a dollar earned in five years isn't worth the same as a dollar in your pocket right now. This method is ideal for businesses with a history of stable, predictable earnings, as it focuses directly on the economic benefits the owner can expect to receive.

The Cost Approach

The cost approach, which is closely related to the asset-based approach, determines value by calculating what it would cost to replace the business's assets. Essentially, it asks, "What would a buyer have to spend to build a similar business from the ground up?" This involves assessing the fair market value of all company assets, both tangible and intangible. This method is often used for asset-heavy businesses or in situations where a company might be worth more if its assets were sold off individually rather than as part of a going concern. It provides a practical baseline for value based on the replacement cost of its components.

What Affects the Cost of a Valuation?

One of the first questions business owners ask is, "How much will this cost?" The answer is: it depends. A business valuation isn't a standard, off-the-shelf product. The price tag is tailored to your specific situation, reflecting the unique characteristics of your business and the reasons you need the valuation in the first place. Think of it like commissioning a custom piece of furniture instead of buying one from a big-box store—the work involved directly shapes the final cost.

Several key factors influence the price, from the size and intricacy of your operations to how quickly you need the final report. Understanding these elements will help you set a realistic budget and see why a thorough valuation is a worthwhile investment. It ensures you get a report that is not only accurate but also serves its intended purpose, whether you're planning a sale, settling a legal matter, or preparing for the future. Below, we’ll walk through the main drivers that determine the cost of a professional valuation.

Your Business's Size and Complexity

It makes sense that valuing a small local coffee shop will be a different undertaking than valuing a multi-state manufacturing company. The larger and more complex your business, the more time and expertise are required to determine its worth. A business with multiple revenue streams, intricate financial records, or diverse assets simply has more layers to analyze. For a small, straightforward business, a standard valuation might cost between $2,000 and $10,000. For larger or highly complex companies, the investment can be significantly more, reflecting the deep dive needed to produce an accurate and defensible number.

The Scope of the Project

The scope of the valuation defines how deep the analysis goes. A high-level estimate for internal planning will naturally cost less than a comprehensive valuation that examines every facet of your business. The specific valuation methods used also play a role, as some are more time-intensive than others. The scope also includes the level of detail you need in the final report and the experience of the professional performing the valuation. A seasoned expert brings a level of insight that is critical for complex situations, and that expertise is factored into the project's cost.

Your Timeline

Timing is another practical factor that can affect the price. If you need a valuation completed on a tight deadline, you can expect to pay a premium for the expedited service. Valuation professionals often have a full schedule, and prioritizing your project means rearranging other work. To avoid rush fees, it’s always a good idea to start the valuation process as early as possible. Giving your valuation partner ample time allows for a more thorough process without the added pressure and cost of a tight turnaround.

The Purpose of the Valuation

Why do you need a valuation? The answer to this question is one of the biggest cost drivers. A valuation for internal strategic planning, for instance, is typically less expensive because its audience is you and your team. However, a valuation for tax planning purposes, like estate and gift taxes, costs more because it must adhere to strict regulatory standards and withstand scrutiny from the IRS. The purpose dictates the level of rigor, detail, and documentation required, which in turn influences the final price.

The Report's Complexity

Just as the purpose varies, so does the final report. A simple, summary-level report for internal decision-making will be more affordable than a detailed, comprehensive report intended for external parties. If the valuation is for a court case, such as a shareholder dispute or divorce, the report must be incredibly thorough and strong enough to hold up under legal scrutiny. In these situations, the valuation expert may also need to provide testimony, which adds another layer of service and cost to the engagement.

What to Look for in a Valuation Partner

Choosing a valuation partner is a big decision. You're not just hiring someone to crunch numbers; you're trusting them with a critical piece of your business's financial story. The right partner provides more than just a report—they offer clarity, confidence, and a strategic perspective that can shape your next move, whether you're planning a sale, securing funding, or preparing for the future. A valuation isn't a commodity; the quality of the analysis and the insight behind it can have a real impact on your outcomes. But with so many options out there, how do you find a firm that truly has your back?

It comes down to looking for a few key indicators of expertise, experience, and integrity. Think of it like hiring any key team member. You want someone with the right qualifications, a proven track record, and a commitment to doing things the right way. This isn't the time to cut corners. Taking a moment to vet your options properly will pay dividends down the line, ensuring the number you get is one you can stand behind. The following criteria will help you separate the true experts from the rest, giving you a clear framework for making your choice.

Professional Certifications

First things first, check for professional certifications. These aren't just fancy letters after a name; they're proof that a valuation expert has met strict standards for knowledge, objectivity, and ethics. For example, a Certified Valuation Analyst (CVA) has gone through rigorous training and testing in business valuation and financial consulting. Seeing credentials like this gives you assurance that your partner is well-equipped to handle the complexities of your valuation. It’s a clear sign that they are dedicated to their craft and have been vetted by a professional governing body, which is a great starting point for building trust.

Relevant Industry Experience

Beyond certifications, you need a partner with real-world, relevant experience. Look for a professional who has at least two years of full-time experience dedicated specifically to business valuation. Why is this so important? Because valuation is both an art and a science. An experienced analyst has seen different market cycles, worked with businesses like yours, and understands the nuances that a textbook can't teach. This background ensures they can provide an accurate valuation that is tailored to your specific industry and circumstances, not just a generic calculation that misses the bigger picture.

Association Memberships

Active membership in professional associations is another strong signal of a credible partner. These organizations hold their members to high ethical standards and require ongoing education to stay current with industry changes. For instance, professionals who hold the Certified in the Valuation of Financial Instruments (CVFI) credential must follow strict guidelines, especially when their work is part of a regulatory filing. This commitment shows that the firm isn't just meeting the minimum requirements but is actively engaged in the professional community and dedicated to maintaining the highest level of practice.

Commitment to Quality Standards

Finally, a great valuation partner is confident in their work and committed to quality. One of the best ways to gauge this is to see if they are open to a peer review process. This means they are willing to have their analysis and final report reviewed by other qualified professionals, such as a CPA or someone holding an Accredited in Business Valuation (ABV) credential. This isn't about second-guessing their work; it's about ensuring accuracy and accountability. A partner who embraces this level of scrutiny is one who is truly dedicated to delivering the most reliable and defensible valuation possible.

Clearing Up Common Valuation Myths

The world of business valuation is full of misconceptions that can lead to costly mistakes. Believing these myths can give you a skewed sense of your company's worth and lead you to make poor strategic decisions. Let's clear the air and look at the reality behind some of the most common valuation myths so you can move forward with confidence and clarity.

Myth: Any valuation works for any purpose.

It’s easy to think a valuation is a one-size-fits-all number, but the reality is much more nuanced. The purpose of the valuation dictates the entire process, from the methods used to the final report. A valuation for estate tax purposes will follow different guidelines and assumptions than one prepared for a potential merger. Similarly, a valuation for securing a loan is different from one used in a shareholder dispute.

A valuation can also be a powerful strategic tool. It can expose areas of your business that are dragging down its value, like underperforming assets or weak financial controls. This type of diagnostic valuation has a completely different goal than one meant for compliance. Always start with the "why" before you begin.

Myth: A valuation covers every single asset.

When you hear "business valuation," you might picture an appraiser with a clipboard, assigning a value to every desk, computer, and coffee mug. This isn't quite right. A business valuation typically assesses the company as a whole—a living, breathing, cash-generating entity. It focuses on its overall earning potential, not just the sum of its physical parts.

While the process considers all assets and liabilities, it doesn't always involve a detailed appraisal of each individual item. Specific appraisals for things like real estate, heavy machinery, or intellectual property are often separate, specialized tasks. These can be included in the scope, but they are distinct valuation services that support the overall business valuation, not replace it.

Myth: The asking price is the same as its value.

This is one of the most persistent myths, especially for entrepreneurs who have poured their lives into their businesses. An asking price is simply a starting point for negotiation—it’s the number a seller hopes to get. The final sale price is what a buyer is willing to pay. A professional valuation, on the other hand, is an objective and defensible opinion of worth based on proven methodologies and market data.

As experts will tell you, the appraised value is not the same as the listing or sale price. An independent valuation cuts through emotional bias and market noise to provide a realistic picture of what your business is worth, giving you a solid foundation for any transaction or strategic plan.

Myth: Your internal team can always handle it.

While your internal finance team knows your business inside and out, they aren't the right people to perform a formal valuation. For one, they lack the independence required for a credible assessment. Their inherent bias, even if unintentional, can skew the results. Secondly, business valuation is a specialized field that requires deep expertise in complex financial modeling, industry trends, and legal standards.

For most official purposes—like IRS compliance, litigation support, or attracting investors—a certified, third-party valuation is non-negotiable. An independent expert provides an objective and defensible opinion that will stand up to scrutiny from buyers, lenders, and regulatory bodies. Relying on an external partner ensures your valuation is both accurate and credible.

What to Expect: Our Valuation Process

Understanding the value of your business is a major step, whether you're planning to sell, navigating tax requirements, or settling a legal matter. The process can seem intimidating from the outside, but our goal is to make it transparent and straightforward. We’ve refined our approach into four clear steps, ensuring you know exactly what’s happening, why it’s happening, and what comes next. Think of us as your dedicated partners, here to bring clarity to the numbers so you can focus on your next strategic move.

Step 1: Initial Consultation

Our process begins with a simple conversation. During this initial consultation, we’ll sit down with you to understand your specific situation and what you hope to achieve with a valuation. Are you preparing for a merger? Planning your estate? Or simply trying to get a clear picture of your company’s financial health? This discussion is crucial because the purpose of the valuation dictates the entire approach. We’ll define the scope of the project, establish a timeline, and answer any preliminary questions you have. This first meeting sets the foundation for a smooth and successful engagement, ensuring our work is perfectly aligned with your goals from day one.

Step 2: Data Collection and Analysis

Once we’ve established the "why," we move on to the "what." This is where our team dives into the details of your business. We’ll work with you to gather the necessary information, which typically includes a review of your historical financial statements, operational procedures, and growth projections. But we don't stop there. A comprehensive valuation also requires looking outward. We conduct in-depth research into market trends, economic conditions, and comparable companies within your industry. This dual focus on your internal operations and the external market allows us to build a complete, data-driven picture of your business's value.

Step 3: Report Development

After our analysis is complete, we translate our findings into a comprehensive valuation report. We believe a report is only useful if it’s easy to understand, so we take great care to present the information clearly and concisely. You won’t find dense, academic language here. Instead, you’ll receive a document that tells the story of your business’s value, supported by transparent methodologies and factual evidence. Every conclusion is well-supported, providing you with a credible and defensible report that you can confidently share with stakeholders, investors, or legal counsel.

Step 4: Review and Implementation

A valuation is more than just a number—it’s a tool for decision-making. We don’t just email you a report and call it a day. The final step of our process is a thorough review session where we walk you through our findings, explain our methodology, and answer all of your questions. We want to ensure you fully understand the details behind your company’s valuation. From there, we can discuss how to implement this knowledge into your broader business strategy. Our commitment to quality, accuracy, and client care means we’re here to help you use this valuation to move forward with confidence.

The Strategic Advantage of a Professional Valuation

Getting a professional valuation is more than just a box to check during a major transaction. Think of it as a strategic tool that gives you a clear, unbiased look at your business's health and potential. When you understand what your company is truly worth—and why—you can stop making decisions based on gut feelings and start acting on solid data. This clarity becomes your roadmap, guiding everything from daily operations to your most ambitious long-term goals. A valuation isn't just about knowing a number; it's about using that number to build a stronger, more profitable, and more resilient business. It empowers you to plan for the future, manage risks effectively, and seize opportunities with confidence.

Make Smarter Business Decisions

A professional valuation acts like a comprehensive diagnostic for your company. It goes beyond the surface to give you an objective look at what’s driving value and what’s holding you back. The final report doesn't just give you a number; it reveals the story behind it. A thorough analysis can expose underperforming assets, inefficient operations, or weaknesses in your financial controls that might otherwise go unnoticed. Armed with this insight, you can make targeted improvements, allocate resources more effectively, and focus your team’s energy where it will have the greatest impact. It’s the difference between guessing what needs to be fixed and knowing exactly where to focus for maximum growth.

Manage Financial Risk

Relying on an informal or internal estimate of your company’s value can be a risky move. When it comes to securing loans, attracting investors, or even getting the right insurance coverage, a credible, third-party valuation is essential. Professional valuation services are bound by strict guidelines and legal standards, such as the Uniform Standards of Professional Appraisal Practice (USPAP). Adhering to these standards ensures the final report is defensible, objective, and reliable. This formal documentation protects your business from the financial and legal fallout of undervaluing assets or misrepresenting your company’s worth to stakeholders, giving you a solid foundation to stand on.

Ensure Regulatory Compliance

In many business scenarios, a formal valuation isn't just a good idea—it's a requirement. Whether you're preparing tax returns, submitting financial reports to the SEC, or creating an Employee Stock Ownership Plan (ESOP), regulatory bodies demand accurate and defensible valuations. Professionals in this field must follow specific frameworks, especially when dealing with complex financial instruments. For instance, the AICPA provides clear guidance that valuation experts must follow for certain filings. Working with a firm that understands these rules ensures your business remains compliant, helping you avoid costly penalties, legal trouble, and stressful audits.

Strengthen Your Financial Planning

A valuation is a fundamental building block for any solid long-term strategy. How can you plan for the future if you don’t have an accurate picture of where you stand today? Knowing your company's value provides a crucial baseline for setting realistic growth targets, planning for a future sale, or mapping out a succession plan. It informs key decisions around estate and tax planning, helps justify capital expenditures, and provides the necessary documentation for securing financing. By integrating a professional valuation into your regular business planning, you create a clear and actionable roadmap for achieving your financial goals.

Gain Legal Protection

Business disputes can be complicated and emotionally charged, especially when they involve co-owners, partners, or family members. An independent, professional valuation can be your strongest asset in these situations. In cases of shareholder disagreements, divorce settlements, or partnership dissolutions, an objective valuation provides a clear, defensible number that removes personal bias and guesswork from the equation. This factual basis can help facilitate a smoother negotiation and protect your interests. It provides the clarity needed to resolve conflicts fairly and efficiently, saving you significant time, money, and stress in the long run.

Frequently Asked Questions

How often should I get my business valued? Think of a valuation like a regular financial check-up for your business. While there's no single rule, a good practice is to get a valuation every one to two years for strategic planning purposes. This helps you track your company's growth and make informed decisions. Of course, you'll also need one for specific trigger events, like planning a sale, bringing on an investor, or updating your succession plan.

Is a valuation only useful if I'm planning to sell my company? Not at all. While a valuation is absolutely critical for a sale, that’s just one of its many uses. A valuation is a powerful strategic tool that gives you an objective look at your company's strengths and weaknesses. It can guide your decisions on everything from operational improvements to securing a loan. It's also essential for tax and estate planning, resolving shareholder disputes, and simply understanding the true financial health of your business.

What can I do to prepare for the valuation process? The best thing you can do to ensure a smooth process is to get your financial house in order. Having clean, organized financial statements for the past three to five years is the most important first step. It’s also helpful to gather other key documents ahead of time, such as your business plan, major customer contracts, and lease agreements. The more organized your information is, the more efficient and accurate the valuation will be.

How long does a typical valuation take from start to finish? The timeline really depends on the size and complexity of your business, as well as how quickly you can provide the necessary information. For a relatively straightforward company, the entire process from our initial conversation to delivering the final report typically takes about three to four weeks. For larger or more complex businesses, it might take six weeks or more. We will always work with you to establish a clear and realistic timeline upfront.

My business isn't profitable yet. Can it still have value? Yes, absolutely. Profit is an important metric, but it isn't the only factor that determines a company's worth. For businesses that aren't yet profitable, a valuation expert will look at other key drivers of value. This can include the strength of your intangible assets like patents or brand recognition, your market position, your growth potential, and the value of your physical assets. Many successful companies have significant value long before they start generating a profit.

Brad Parker