Why do I need a third party valuation? Can't I just have my tax accountant put a value on my business?
No, for two reasons. First, most local tax accountants are not qualified to do business valuation. Business valuation is a specific skill that requires extensive knowledge and experience. At The Herold-Lambert Group, we use a national appraisal company that does nothing but business appraisals. They do hundreds of valuations each year. They do them for banks, insurance companies and brokers.
The second, and most important point is the key phrase "independent third-party appraisal." Even if their accountant is fully qualified, it is still not a third-party, arm's length relationship.
One of the first questions buyers ask is "How did you come up with the price?" If the answer is "My accountant or my broker came up with it" then the business valuation is immediately suspect and devalued.
If the answer is "We had an independent third-party appraisal done by a nationally recognized valuation company that does nothing but business appraisals," then the buyer usually accepts it. If the buyer doesn't, then he or she has a very hard time refuting it.
I've invested a lot of money in my business - I've spent thousands of dollars on non-asset costs, such as software, advertising, publicity, whatever - and now I want the price of the business to reflect all of those sunk costs.
That's all well and good, but the value of any business asset, tangible or intangible, is its ability to generate income. That being said, the professional appraisals we have done looks at 9 different determinants of value, including the current fair market value of the tangible assets. Each method is weighted based upon how relevant that aspect is to the overall valuation.
Call Lou Pereira today at 603.890.6628 or contact him directly via e-mail
to discuss how a professional business valuation can make the difference in selling your business.