How We Can Help
How can a professional valuation consultant help you?
Many business owners believe the value of their business is net profit, or gross sales, multiplied by an industry rule of thumb. This is simply not the case. In fact, the application of an industry rule of thumb formula often results in a value determination that differs significantly from the actual value that could be determined by a qualified business valuation professional.
The consequences of an inaccurate valuation—too high or too low—generally lead to undesirable consequences. For instance, if the valuation for an estate tax return is too high, then estate taxes will be too high. If the valuation for the sale of a business is too low, the business owner risks limiting his or her return on the sale. In a marital dissolution, you want to know that you are receiving a fair value for your interest.
Determining the true value of a business requires a careful analysis of two primary components that make up value: tangible assets such as real estate, machinery, and furniture used by the business, and various intangible assets such as business goodwill. Intangible assets might also include customer lists, trademarks, copyrights, distribution rights, a superior management team, non-compete agreements, physical location, special processes and name recognition. Quite often, the value of a company’s intangible assets is much greater than the value of its tangible assets. Valuing intangibles, however, requires the services of a qualified business valuation professional. It requires a careful analysis of the many aspects and facets of a business enterprise utilizing knowledge acquired through training in all aspects of business fundamentals, including finance and valuation applications, and draws upon a skill set acquired through a range of experiences both working with and valuing business enterprises.
Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.