The Business Valuation Primer
Apr 28 2017
Whether it’s the first, or the 51st, obtaining a proper online business valuation can be an uphill battle, if you go into the process without doing the right research. To help, we’ve compiled some important frequently asked questions to serve as guide while navigating the business valuation process.
Are Business Valuations Important?
Yes. Business owners of any kind are strongly advised to seek a valuation, regardless of the size of the business. There are many reasons why an owner would want their business valuated, including:
- Buying or selling a business
- Debt or equity financing
- Taxes or estate planning
- Compliance regulations
- Divorce, business partner disputes, or bankruptcy
- Gifting stock
So, getting a proper business valuation is far more important to preserving the worth of a business than one would think.
How Much Does a Business Valuation Cost?
Short answer? It depends.
Very few appraisers can come to an exact fee without first knowing why the business valuation is being conducted. Contingency fees can also play a major part in final tabulations. The general rule is that for business appraisal, best practice dictates that appraisers should not do work on any kind of contingent fee basis, as this could cause conflict. Conversely, contingent fees are common, if an appraiser is officially acting as a consultant or transaction advisor.
For a business appraisal, the profession’s ethical and professional standards forbid an appraiser from working on any kind of contingent fee basis due to the obvious conflict of interest that such an arrangement would create. However, when acting as a consultant or transaction advisor (and not as “an appraiser”), a contingent fee arrangement is common.
How Long Does It Take To Conduct a Business Valuation?
Any business valuation that’s worth its salt will require thoughtful analysis and preparation by the company doing the valuation. This means a proper one will take some time. On average, an appraisal made by a professional preparer usually takes anywhere between 24 to 48 hours, depending on the size of the business. Meanwhile, a full-scale valuation can take weeks or even months.
Naturally, an online valuation, or consultation, takes considerably less time to complete.
Who Can Provide A Credible Valuation?
Although there are plenty of capable business valuation services out there, only PeerComps can provide quality service and cutting-edge tools that generate accurate, comprehensive business valuations.