Business Valuation Advisors (BVA) provides business valuations appraisals. The value of an ongoing business requires more than an appraisal of underlying assets. Since most businesses are purchased for their ability to generate cash flow, the value of an operating company’s assets seldom reflects market value for a business. In addition, accounting book value only measures original asset costs that have been adjusted by accounting standards.
A business valuation appraisal is essential for these reasons and circumstances:
- Buy/Sell Agreements
- Acquisition, Sale or Merger
- Estate and Gift Tax Planning
- Marital Dissolution
- Eminent Domain
- Bank Loans
- Small Business Administration (SBA) Financing
- Purchase Price Allocations
- Succession Planning
A business valuation appraisal can be determined by employing standard valuation methods, including balance sheet analysis, adjusted book value, liquidation value, capitalization of earnings, price-to-earnings ratio and discounted future earnings.
The standard of value is the most fundamental aspect of an assignment. It is almost always dictated by the reason for the appraisal, but sometimes can create confusion. BVA will be sure to clarify the appropriate standard of value for your assignment and explain it carefully.
The premise of value depends on the standard of value, the purpose of the appraisal, the business situation, the type of ownership interest to be valued, and many other case facts and circumstances. BVA will be sure to clarify the appropriate premise of value for your assignment and explain it carefully.
In most cases, there are two possible states for a business to be in: going concern or liquidation. A profitable business with prudent debt, reasonable risk, competent management, and other “normal conditions” will almost certainly qualify as a going concern, valued on the basis of the economic benefits it provides to its owners. On the other hand, a business that is in distress due to any number of reasons might be better off liquidating; i.e. ceasing operations, selling its assets, and paying off its obligations.
