Guidelines for Business Valuations
At Summit Acquisitions Group, we understand the importance of an accurate business appraisal (or business valuation opinion) as THE KEY STEP involved in any successful business sale, merger or acquisition. We offer the Most Probable Selling Price and Calculation of Value reports to prospective and new clients as the two most cost-effective solutions. And we outsource formal business appraisals (for specific-need situations) to a well-respected independent professional business appraiser. We have negotiated a favorable price for business appraisals from this firm, and we coordinate the process for you – so you save money and time.
Based upon your specific needs, as described below, we offer these five business valuation options (in order of cost): (i) Most Probable Selling Price, (ii) Calculation of Value, (iii) Business Appraisal, (iv) Complete Appraisal Summary, and (v) Complete Appraisal.
Most Probable Selling Price .7K
To determine the Most Probable Selling Price (MPSP) for your business, we use a Proprietary Data-Driven Business Valuation Platform (BVP) exclusively for business brokers. The platform contains a vast database of small business transactions compiled from hundreds of national, regional, and local SBA lenders since 1999. The data for each transaction includes: (i) prior annual sales, (ii) the sales price, and (iii) Price2Sales, Price2SDE, and Price2EBITDA ratios. Today, that database includes over 15,000 SBA transactions, and about 100 new comparisons are added every month.
Valuation: We multiply the Market Multiple times the Weighted Average Adjusted Earnings to arrive at the Most Probable Selling Price of the business.
Final Report: Client receives a 2 page report, containing a list of all comparables used in the Market Multiple calculation, and the details used in that calculation of the Weighted Average Adjusted Earnings used in the determination of the Most Probable Selling Price.
Calculation of Value .99K
To determine the Calculation of Value for your business, we use a Proprietary Data-Driven Business Valuation Platform (BVP) exclusively for business brokers. The platform contains a vast database of small business transactions compiled from hundreds of national, regional, and local SBA lenders since 1999. The data for each transaction includes: (i) prior annual sales, (ii) the sales price, and (iii) Price2Sales, Price2SDE, and Price2EBITDA ratios. Today, that database includes over 15,000 SBA transactions, and about 100 new comparisons are added every month.
The database is filtered and cross-checked for inconsistencies by industry specialists, resulting in consistently accurate transaction reports. Since the data is compiled only using SBA 7(a) loans from verified sources, the market data is the most accurate in the industry.
Valuation: The Business Valuation component of BVP calculates separate valuations using three methods: (1) Adjusted Asset Method (asset approach), (2) Discounted Future Earnings Method (income approach), and (3) Direct Market Data Method (Market Approach). The BVP then determines, after “confidence” weighting, the Calculation of Value of the business.
Final Report: Client receives a 20 page report, including a detailed explanation of the Valuation Methodology used and the actual Calculation of Value.
BUSINESS APPRAISAL 2.7K
This is a USPAP Restricted Use Appraisal report designed specifically for our Business Broker clients to assist them in listing their client’s business for sale. This report should be considered for those brokers who are representing businesses with less than $1MM in cash flow and/or those transactions involving the sale of 100% of the company. This report is formatted to be SBA compliant and will only require a minimal update (by the lender) when used as part of an SBA Loan. This report cannot be used for any other purpose.
Turnaround Time: 2-3 weeks to the preliminary draft phase
COMPLETE APPRAISAL SUMMARY 7.5K
A summarized version of the Complete Appraisal with the level of reporting that contains, at minimum, a summary of the material factors that lead to the conclusion of value and intended to reduce the normal appraisal burden (time and cost) of writing a comprehensive/self-contained report. This report cannot be used for any other purpose. This report should be considered for those brokers who are representing businesses with more than $1MM in cash flow and/or those transactions involving the sale of less than 100% of the company.
Turnaround Time: 4-6 weeks to the preliminary draft phase
COMPLETE APPRAISAL 15K+
SELF-CONTAINED REPORT
This is a formal presentation representing a conclusion of value in a self-contained written report, intended for multiple users. The Complete Appraisal is solely used for, but not limited to, Litigation, Gifting/Estate, ESOP, Corporation Status Elections, Partner Disputes, Marital Dissolution, etc. USPAP and American Society of Appraisers (ASA) address the above as a “Comprehensive, Written Business Appraisal Report”. The Institute of Business Appraisers (IBA) addresses the above as a “Formal Written Report”.
*Price may change depending on scope or complexity of the report.
Turnaround Time: 6-8 weeks to the preliminary draft phase. ***Referral Only***