Business valuation. A guide for entrepreneurs

Preparing for an evaluation

An appraisal can help you establish a fair purchase or sale price, develop your business strategy, or undertake your tax planning. Find a trustworthy appraiser and ensure they have access to the necessary information about your business. As a first step, the appraiser will help you determine the appropriate level of complexity for the appraisal.

The valuation of a company

There are several methods for valuing a business. The one to adopt depends on the type of business and transaction. Valuing intangible assets, which can represent a significant portion of a company’s value, requires a certain level of expertise. However, it’s important to avoid common mistakes, such as having unrealistic expectations. Entrepreneurs often make the mistake of trying to value their business themselves, without professional help.

Price and value

The amount determined by an appraiser is often different from the price a business ultimately obtains on the market. The final price can vary for several reasons, such as the owner’s eagerness to sell, the buyer’s strategic interests, or the availability of financing. Regardless, it’s a good idea to think beyond the price to find ways to maximize your business’s value.