Business Valuation Services
Business Appraisal vs. Calculation of Value
At Summit Acquisitions Group, we believe the business valuation of a company is THE KEY STEP to a successful sale. An accurate appraisal, or business valuation, is crucial, because it can reveal the maximum market value for the seller and it can reduce the gap between the expected purchase price of the seller and the final negotiated price.
Qualified professional independent business appraisers typically prepare business appraisals for the following reasons: (i) exit planning and buy-sell agreements; (ii) gift & estate tax, and charitable donations; (iii) portfolio valuations; and (iv) marital dissolutions, shareholder disputes, bankruptcy, and fraud. And they follow the Uniform Standards of Professional Appraisal Practice, the Institute of Business Appraisers, and American Society of Appraisers.
Professional Independent business appraisers use three primary approaches to determine a company’s value:
Asset Approach: Measures the fair market value of a company’s assets, less its liabilities. Frequently used for under-performing companies, this approach is not appropriate for companies with high intangible value.
Income Approach: Weighs the expected benefits from investing in the company against the required return for assuming the risk and uncertainty associated with it. This approach can account for changes in revenue growth, working capital needs, future capital expenditures, and differences in financing.
Market Approach: Evaluates a company based on completed transactions of comparable companies. This is the most widely used approach for business valuations – because it includes real transactions negotiated between actual buyers and sellers, and financed by independent financial institutions.
Most professional business appraisers quote a project fee or an hourly rate, with outside expenses billed separately. Depending on the scope of the valuation, a valuation can cost anywhere from $5,000 to over $20,000.
Several years ago, we decided to outsource our business appraisals to a credible third party in order to eliminate the appearance of a conflict of interest. As such, we contracted with one of the best professional business appraisal firms in the United States. This partner has completed more than 9,000 corporate appraisals, and is highly regarded in our industry. And we manage the appraisal process for our clients. Due to the volume of business we do with this firm, we have negotiated a favorable cost structure for the various types of appraisals they perform.
For additional information on Appraisals, please contact the Atlanta or Charlotte office, or click here.
However, if you would rather not invest in an expensive business appraisal, we can prepare a lower-cost Calculation of Value report – which should be within 5% of the valuation results from an appraisal. Click here to see a sample of our Calculation of Value report.
Our valuation resources are extensive, and critical to our success. Through our subscriptions to numerous business comparable databases, we are knowledgeable of market conditions at all times – using Sold and For Sale data available to us. Additionally, we are actively in the market with many sales in process at any given time, so we know what buyers are willing to pay for businesses in a wide range of industries. Our internal business valuation experts have been valuing companies for well over 20 years. And, as part of our process on every market valuation opinion, to supplement our experience in the market, we consult with a number of bankers who currently finance acquisition transactions.
For additional information on our Calculation of Value reports, please contact the Atlanta or Charlotte office, or click here.
The Summit Acquisitions Group — Business Brokers and M&A Advisors — specializes in the sale, appraisal, and financing of privately owned companies ranging in valuation from $750,000 to $25,000,000. Contact their offices in Atlanta, GA or Charlotte, NC for a free consultation.