Its critical to determine the purpose of valuation. This determination shapes the choice of valuation methods to apply, because different approaches and concepts may be more appropriate for different purposes.
It doesn’t matter how much you, your CPA, your financial adviser, your attorney, or your business broker thinks your business is worth. You need to get an objective third party valuation done to attract serious and qualified buyers both locally and nationally. This is the service our business valuation partner provides.
Most business owners use tax returns of financial statements perpared for tax purposes as the basis for the financial presentation of their business. As a result, the market value of assets is not reflected because of depreciation or acceptable deductions that are written of for tax purposes. While this may be good for tax purposes, tax return financials do not reflect years of hard work in accumulating business assets. The business goodwill or intangible value, which represents a major component of what the business is worth in many cases, is not a consideration for income tax purposes and therefore not addressed in, financial statements for tax purposes.
For a business to grow and expand in today’s market, capital and financing are essential. The financial presentation reflecting what the business is worth can be a powerful tool in dealing with financial institutions, suppliers, and customers.