Whether your business is small and family-run, or large and multinational, there are many reasons you might want to hire a certified business valuation appraiser. Whatever the situation, an appraiser will always have just one goal in mind -- to correctly determine the equity ownership of your company. To this end, you'll want to keep a number of things in mind before hiring an appraiser. Take a look at just three of the most important ones below.
Types of Valuations
Not all valuations are the same. In some instances, you will need a valuation for the purposes of conducting a transaction. Other situations may require a valuation before financial reporting. Another situation, such as a shareholder dispute, is cause for a valuation as well. In each of these cases, appraisers may choose to take different approaches to their valuation. Knowing the motivating factors behind your valuation as well as the approaches an appraiser is likely to take are important to the valuation process.
Documents Needed
It is never a good idea to go into a business valuation unprepared. One of the most common mistakes that business owners make, however, is not having all of the proper documentation they need to get the process started. Although of course, every business's situation varies. In general, you should gather the following: business planning reports and other reports done by various consultants; any materials that describe company operations, products, and services in detail; as well as documents related to projections of the company's financial future. A business valuation appraiser may seek out other documents, but having these ready at the outset is strongly recommended.
Long-Term Approaches
One thing that often separates successful businesses from those that fall by the wayside is the degree to which they focus on long-term plans. In fact, many savvy business owners use valuations of their company in the present moment to dictate the course of the company in the future. They are able to do this because a large part of business valuation appraisals is identifying the drivers of value themselves. These may be related to things as varied as growth or efficiency within the company, and more specifically on things such as access to capital, economies of scale, the market environment, and the company's strategic vision. Regardless of what drives your company's value, it's imperative to take a long-term approach to valuation before you hire a business appraiser.
