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Business Valuations - FAQ

Get answers to many common Business Valuation questions below - Have more questions? Please contact us today!

Business Valuations - FAQ

How do I determine what my business is worth?
You can hire a certified valuation analyst who will value your business.
What is a certified valuation analyst?
A valuation analyst determines the overall value of a business entity with what is known as a conclusion of value. This includes the tangible and intangible assets of the business.
Why hire a certified valuations analyst?
The conclusions of a certified valuations analyst will hold up in court, be recognized by the IRS, and will withstand the scrutiny of any bank or serious buyer. A non-professional valuator will not. Remember, you always get what you pay for.
What is a business Valuation?
A business valuation is a determination of a business's overall value including both tangible and intangible assets. A certified valuation analyst should be sought to correctly determine which standards of value to use in the analysis process that determines the company's enterprise value or minority interest value as required for the engagement.
What is a business valuation report?
A valuation report is the end product of a business valuation. This is the report that banks, the IRS, and potential purchasers of your business want to see to verify the value of your business.
What types of business entities can be valued?
C Corporations, S Corporations, Limited Liability Companies (LLCs), Limited Liability Partnerships (LLPs), Proprietorships, General Partnerships, Trusts, and Undivided interests
What does a business valuation report include?
It includes the valuation's purpose, intended users, a statement of value, an overview of specific risk factors, a company description, background and history and its market position, industry trends and economic conditions, detailed financial statements and an explanation of methods used for determining value based on company specifics with all assumptions tested for validity, a reconciliation of the values derived under the various approaches, a Conclusion of Value with the stated opinion of the analyst, assumptions and limiting conditions, Certification of the analyst and the CV or credentials and experience of the analyst.
Why is a business valuation important to my business?
A business's true value needs to be assessed for many different reasons: for IRS tax purposes, litigation and other court case purposes, share-holder disputes, or for the selling of one's business, just to name a few. The only way to establish a business's true value is to hire a certified analyst to assess it for you.
How do I get started with my business valuation?
A signed Engagement letter is required to start your business Valuation. Click here for more information on the Business valuation process.
What does it cost to get a business valuation?
Prices vary greatly depending upon your business's size, complexity and valuation needs. We offer: Simple spreadsheet with statistics for $500; add the Determination of Cash Flow for $1,000; Broker Opinion of Value for $1,500 to $2,000; Calculation of Value for $2,500 to $3,500; full Valuations ranging from $3,500 to $20,500.
What information do I need to provide?
NBA will need 5 years of financial statements including balance sheets and income statements, or tax returns if the income statements are not available, business history and background, accounts payable and receivable, correct (appraised if necessary) tangible asset values, company owner and stockholders info, and ownership percentages, etc.
What factors influence the final value of my Business?
Factors include the company's industry and multiples derived for that specific industry, the economy, length of time the business has been in existence, cash flow and more. Value determination can be very complex and each situation is individual and company-specific.
How do you support your conclusions in your report?
Each Valuation includes a "conclusion of value". Its inclusion is an industry requirement for each completed valuation. It is the final value placed on the business entity and is supported by all of the information used during the analysis process.
How long will my valuation take to complete?
From inception to delivery, a business valuation can take anywhere from 4 to 8 weeks depending upon the complexity of the business being valued. However, the clock doesn't start ticking until the business owner has supplied NBA with all pertinent documentation to start the valuation process.
Can my accountant value my business?
Yes, as long as your CPA is qualified with one of the following designations: ABV (Accredited in Business Valuation), CVA (Certified Valuation Analyst with NACVA), CBA (Certified Business Appraiser with IBA) or certification from the ASA (American Society of Appraisers). However, less the 2% of all CPA's have this qualification.
Does NBA use market comparables?
Yes, because the best way to value a business is to use the market approach. Although NBA makes every attempt to use Market Comparables, they don't always exist for the specific business in question. Every effort is used to find available comparables before the market approach is set aside for another approach.
What happens with my personal info once the valuation is complete?
The original documents are returned to the owner. A copy of the seller's original documentation is kept on file in accordance with the record-keeping requirements for valuation analysts.
Why do most businesses for sale never sell?
Many business owners over-value their business as much as double to triple it's actual worth. A qualified business valuator creates an official business valuation helping the business owner get to the business's true value. This builds confidence on both the selling and purchasing side of the transaction.
In what states can NBA appraise and value businesses?
NBA can value businesses located in any of the 50 states.
What are NBAs qualifications?
Mr. Schmidt is a former CPA and holds the CVA designation as a Certified Valuation Analyst. He is a member of NACVA (National Association of Certified Valuators and Analysts) and can provide Certified USPAP and NACVA compliant Valuations. Additionally, he is a CBB or Certified Business Broker with CABB (California Association of Business Brokers) and as such can provide a "Broker Opinion of Value". He has industry experience selling hundreds of businesses and has valued thousands of them over his 25 year career. His experience and background makes Lance Schmidt more qualified than 99% of all valuation analysts in the industry today.