Business Valuations

business and office concept - close up of business team with files and laptop computer in office

If you want to know what your business will sell for, you most likely do not need an expensive Certified Valuation Report.  These types of reports are typically only needed for protection or support regarding potential legislative actions.  Most of the time, certified reports exempt the most crucial part of the “Sellable Value” for small businesses, which is the Rule of Thumb valuation method.  The ESS method for determining the sellable value of your business is as follows:

Step 1:  Determine the Owner Discretionary Cash Flow and Asset Values

Step 2:  Research Industry Specific Multiples and/or Rule of Thumb valuation methods

Step 3: Create the Sellable Range of potential values

Step 4: Adjust range for specific risk of the business being valued

Our Senior Business Valuator is Dr. Jason J. Hubler, DBA, CVA; who is a Doctorate of Business Administration, as well as credentialed with the National Association of Certified Valuators and Analysts (NACVA).  The valuation report with a conclusion of value will follow the NACVA standards and guidelines using various formulas for the following three approaches:

  1. Asset and Equity Approach
    1. Review asset values and adjust for equity or asset sale
  2. Income Approach
    1. Assess Gross Revenue; Seller Discretionary Cashflow (SDC); and/or Adjusted EBITDA to determine Income Value
  3. Market Value
    1. Use similar business comparable metrics

Business valuations do not include an official real estate or equipment appraisal; only an estimate of value. There would be an additional fee paid for a certified equipment or real estate appraisal.

General Guideline for information needed to complete a valuation:

  • Most recent three years of Profit and Loss Statements
  • Most recent three years of Balance Sheets
  • Most recent three years of tax returns
  • Most recent fiscal year month-to-month profit and loss
  • Year to Date Income and Expenses (month-to-month)
  • List of Furniture, Fixtures, Equipment, Supplies, etc. that would sell with the business; with estimated value
  • Estimated value of inventory on hand in any given week
  • List of employees and their responsibilities (owner & owner responsibilities)
  • Explanation of Customer Base (% recurring, % new, %contract customers, % of customer volume)
The Value Score Report will provide a score showing where your business is currently within the value range from the valuation report.  It will also provide an analysis of the eight areas of value improvement.

Pricing:

Basic Valuations range from
$2,500 to $10,000

Certified Valuations range from
$5,000 to $25,000

Note: Prices may vary, depending on how many entities or divisions being valued.

Disclaimer:  Valuations are not intended to be used as sales tools.  If selling a business, use a qualified Business Intermediary or Business Broker.