Business Valuation is not an exact science. The process of valuing a business involves comparing several different approaches and selecting the best method based on the analyst's knowledge and experience. There are three broad approaches used by Business Valuers :
The Income Approach
The Market Approach
The Cost or Asset Approach
Any single valuation approach may be used. Professional practices, Real Estate Agents, and Medical and Veterinary Practices may utilise a different approach. Family Court Valuations sometimes also necessitate the use of another approach. What is most appropriately used now in valuing is the Income Approach, which generally doesn't distinguish between goodwill value and asset value. It only cares about the return available, particularly in excess of what the fair market compensation is for that business. One thing is paramount in Busness Valuation, and that is that the valuer has the experience and qualifications to provide a valuation that is accepted for both merger and acquisition or litigation purposes.
To maximize the value of your company or business, you need to develop a plan with clearly defined goals. However, you can’t expect to achieve a goal until you understand where to begin, what kind of challenges you face, and how to monitor your progress along the way.
The first step in building value is to understand how much your business is currently worth and which factors determine your businesses's value. A business valuation, will provide you with such information.
Every business owner should have their business valued by a qualified valuer at least once every five years and when business circumstances change. This will give a business owner a greater understanding of the company's value over time.
A business valuation is not just for a business owner preparing for a sale. There are numerous business and legal situations that require or benefit greatly from a detailed valuation. Among these situations are:
BANKS & FINANCIERS
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