Given the recent economic downturn, many financial institutions have been wary about investing and acquiring in the stock market. Banks are one of these institutions that make a huge difference in the stock market as a whole and in our general economy. They control a vast amount of money, assets, and stock and if faith in the banks crash, there’s a good chance that the entire economy will take a swift downhill turn. For that reason, banks have been trying to increase their security and not make investments that might be deemed risky — they want to keep public trust high and bring in more money and assets. So it’s important for businesses that are looking for high investments and relationships with banks and other big financial players to look as credible and secure as possible. One way this can be achieved is by using business valuation companies to get valuation services for the business. This can also often have many other positive benefits for the company.
Getting the Terms Right
Many people will first ask, “Well what is business valuation anyway?” It’s a measure of determining how much your business is worth by analyzing your assets and company looking at market value and intrinsic value and other factors. (Here’s a simple breakdown of market value and intrinsic value: market value is how much the company could be sold for between buyer and seller and intrinsic value is measuring the worth of a company based on its future earnings.) Two of the most basic things you’ll need to provide business valuation companies with are your income sheets and balance sheets for the last three to five years. The income sheet will give an official financial statement of how a company has done financially over a certain accounting timespan. The balance sheet shows the assets, liabilities, and business capital at a specific point in time and shows how much was earned and how much was spent since the last period.
Well What Else Should I Have on Hand For Business Valuation Companies?
A business valuation company is going to first and foremost want to know why you’re having a business valuation done. Most companies do a valuation when they’re looking to sell the company or make another big change to the way business is done. Ask yourself how you measure the value of your business and what conditions you take that measure under.
You should also provide the company with precisely what is or isn’t for sale (the entire company, certain assets, all assets, etc.,) financial statements dating back at least 3-5 years, a detailed company organization and management report, a history of the company’s finances since its conception, tax return documents, any audits that have been done, and a report on any legal situations the company might have been involved in. You may also want to think about recent sales of business’s that were similar to yours and factor that in — the business valuation companies will certainly be thinking about those!
Why Should I Have a Business Valuation in the First Place?
A business valuation can make you more attractive to those big financial investors, such as banks. It lends your company a sense of credibility and boosts the reputation of your company by showing exactly how much your company is worth. It shows that you have your finances in order and are interested in continuing to grow. It’s also a way to step up the sale of your business and enables you to make an informed decision about how much to sell it for and who to sell it to, in some cases. You can also set financial goals and start planning for the future of the company to ensure its longevity and continued success.
If you’re looking to attract the interest of big investors, a business valuation can be a great start to gaining credibility, making plans to enlarge or expand your business financially, and understand exactly how much your business is worth. There are plenty of business valuation experts that offer business valuation services for you to draw upon. It’s a smart financial choice!
