As a business owner, understanding the value of your company is crucial for making informed decisions, whether you’re looking to sell, seek investment, or plan for the future. A comprehensive business valuation helps you accurately assess the worth of your business, ensuring that you make the best possible choices moving forward.
This Business Valuation Checklist is designed to guide business owners and advisors in gathering all the essential information and documents necessary for an accurate business valuation. Complete each section to ensure you have a comprehensive assessment of your business’s value.
Why Do You Need a Business Valuation?
Whether you’re planning to sell your business, seeking investment, or just curious about your company’s financial standing, knowing how much your business is worth is essential. Having an accurate valuation allows you to:
-
Set realistic expectations when selling or transferring ownership.
-
Attract potential investors by providing clear and professional financial documentation.
-
Make better business decisions by understanding your financial position.
-
Ensure fair compensation if you’re exiting the business.
With the right tools and information, you can confidently determine your business’s value and be better prepared for the next steps in your business journey.
Comprehensive Business Valuation Checklist
This checklist provides the necessary steps to collect all essential documents for a thorough business valuation.
1. Company Information
Start with the basics. Provide accurate and up-to-date details about your business:
-
Legal Business Name
-
Business Address
-
Industry
-
Years in Operation
-
Business Structure (LLC, S-Corp, C-Corp, Sole Proprietorship)
-
Number of Employees
2. Financial Documents
Your financial records provide the most critical data for determining your business’s value. Be sure to include:
-
Last 3-5 Years of Tax Returns
-
Last 3-5 Years of Profit & Loss Statements (Income Statements)
-
Last 3-5 Years of Balance Sheets
-
Current Year-to-Date Financial Statements
-
Recent Cash Flow Statements
-
Accounts Receivable and Accounts Payable Aging Reports
-
Business Bank Statements (Last 12 months)
-
Owner Compensation Details
-
Inventory List and Valuation
-
Business Debt Schedule
-
Capital Expenditures Records
3. Business Operations
This section covers how your business runs on a day-to-day basis and provides a clearer picture of its operations.
-
Description of Products/Services
-
List of Key Customers (Top 10)
-
Customer Contracts (if applicable)
-
Supplier Agreements
-
Business Licenses and Permits
-
Intellectual Property (Patents, Trademarks, Copyrights)
-
Lease Agreements (if renting)
-
Equipment List with Depreciation
-
Employee List (Key Employees, Roles, Salaries)
4. Market and Industry Analysis
A deep dive into your market and industry will help demonstrate your business’s position relative to competitors. Include:
-
Industry Reports and Benchmark Data
-
Competitive Analysis
-
Key Market Trends
-
Customer Demographics
-
Unique Selling Proposition (USP)
5. Legal and Compliance
Ensure your business is legally sound and fully compliant with regulations:
-
Business Registration and Formation Documents
-
Shareholder Agreements
-
Operating Agreements
-
Pending Litigation or Legal Disputes
-
Insurance Policies (Business Liability, Property, Workers Comp)
6. Valuation Approaches
Different valuation methods can provide various perspectives on your business’s worth. Here are some approaches:
-
Earnings-Based Valuation (SDE or EBITDA Multiple)
-
Asset-Based Valuation
-
Market-Based Valuation (Comparable Sales)
-
Discounted Cash Flow (DCF) Analysis
7. Additional Considerations
Certain factors can impact the value of your business. Be sure to account for them:
-
Owner Transition Plan (if selling)
-
Key Employee Retention Plans
-
Special Factors Affecting Value (Seasonality, Regulations)
8. Valuation Calculation Worksheet
Use these calculations to arrive at an accurate value for your business:
-
Seller’s Discretionary Earnings (SDE) Calculation
-
Normalized EBITDA Calculation
-
Adjusted Net Profit Calculation
9. Final Review and Next Steps
Once you’ve gathered all the necessary information, it’s time for a final review:
-
Review Checklist with Business Advisor: A professional can help ensure that you’ve covered all bases.
-
Identify Missing Information: Fill in any gaps to complete your valuation.
-
Schedule Valuation Consultation: Meet with a professional business valuator or broker for a formal valuation.
-
Prepare for Buyer Inquiries: Be ready for potential buyer questions once the valuation is complete.
Conclusion
A Comprehensive Business Valuation Checklist is a crucial tool for business owners who want to accurately assess their business’s worth. Whether you’re planning to sell, seek investment, or simply understand your business’s financial health, having the right information at hand will make the process smoother and more efficient.
For a thorough, expert business valuation, BizProfitPro offers free consultations to help you determine the true value of your business. Schedule your consultation today to take the first step toward making informed business decisions.
