Business Valuations

At some point in every business owner’s life, it will become vital to have a comprehensive understanding of the value of their business. The main tenets that help to determine value are based on relevant facts and figures, and a reliable business valuation will take into account the fair market value, strategic value and intrinsic value of your business.

Reasons For Conducting A Business Valuation

Business valuation is the process carried out by a qualified or accredited appraiser through which a business is thoroughly analyzed, top to bottom. The goal of business valuation is to determine its real-world value and potential.

This process is vital to avoid unwelcome surprises but is also critical to your company’s overall health and success, especially in the case of family-owned businesses. Seemingly overnight, factors that you thought were constant can change, and life-changing decisions must be made.

Business valuation services could be necessary in many situations, including:

  • gift or estate tax planning
  • charitable contributions
  • buying/selling a business
  • exit planning
  • obtaining financing
  • liquidation or reorganization
  • succession, estate planning, and life insurance concerns
  • transferring ownership to Employee Stock Ownership Plans (ESOPS)
  • meeting IRS valuation standards
  • litigation involving the business (divorce, foreclosure, fraud, shareholder actions, wrongful death, etc.)
  • mediation and arbitration

Standard reasons for needing a business valuation typically fall into one of four main categories: transactions, tax reporting, financial reporting, and litigation. Those reasons aside, a business valuation can also serve as an invaluable tool that offers insights to help discover company strengths and weaknesses along with determining overall success and the effectiveness of management and protocol. 

Valuation can be difficult if a company is not publicly traded, which is where professional business valuation services come into play. In fact, it is recommended that businesses conduct periodic valuations to allow for variance based on growth and other changes.

Determining Value

Certified business appraisers can use a variety of methods to aid in accurate valuation. Three common options are:

  • Income Approach: Determines future gains using common data points
  • Market Approach: Assigns valuation based on completed sales of similar businesses
  • Asset Approach: Based on the fair market value of a company’s assets after liabilities

In order to carry out a thorough valuation, companies will need to provide a series of documents, including:

  • profit and loss statements
  • balance sheets
  • tax returns
  • copies of forecasts or projections
  • descriptions of services and/or products
  • significant assets and inventory
  • detailed liabilities
  • professional/consultant reports

Once all paperwork is submitted and relevant data is gathered, the appraiser can get to work. Availability of information, size and complexity of the business, responsiveness of the business owner, and the scope of necessary investigation will determine how long a business valuation will take.

Where To Turn For Business Valuation Needs

A business valuation needs to be a thorough and exact estimate of your company’s value, not a rough guess. That’s why you turn to a professional. Working with an accounting firm that holds specific experience in business valuation is vital. Proper accreditation will ensure that if you need to provide information to the IRS or if you are anticipating litigation, their work will meet any necessary requirements.

At NMS Certified Public Accountants we are able to offer you useful and objective analysis, along with a comprehensive business valuation. We take the time and put in the effort to gain a complete understanding of your business. That solid background allows us to determine an accurate valuation that will enable you to go on to make more informed business decisions and to build on success. We are certified by The American Society of Appraisers (ASA) and the National Association of Certified Valuation Analysts (NACVA) and are ready to help you take that next big step with a business valuation. Contact us today to schedule a consultation.


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