You are in the initial stages of selling your company and you hired a business appraiser to get an idea of what your business is worth. You receive the report…Now what?
How do you know if the value appears to be in the ballpark? What do the report’s details mean to you, the seller and to the buyer? Whatever the reason for a valuation, a basic understanding of the report’s content means there’s no need to take it at face value.
In today’s fast-paced business environment, it’s not uncommon for business owners and their counsel to quickly scan a valuation report, just searching for the final figure. But you can learn much more from a report if you know what to look for throughout. Here are four key areas within the document you might want to focus on:
In addition to these four areas, also look for the definition of the entity being valued. This definition should include the valuation’s purpose, Key Performance Indicators (KPIs) for the business, outlook and viability. The buyer is buying for the sole reason that they feel the value will continue to increase with their knowledge or from the product/service.
Dig into the Details
If you’ve ever received a business valuation report and wondered, “What does this mean? What is this report showing me?” you’re not alone. The right resources can help you decipher the report’s details. If you need help evaluating a valuation report, consider conferring with me.