Everyone should understand the value of any business in which they have a financial interest. Once you understand the value of a company and the key factors that affect its value, you can make more informed business decisions. Whether you are a business owner contemplating the sale of your business, raising bank capital, legal claims, succession planning any event that requires you to know the value of a company.
Both undervaluing and overvaluing a business can have serious financial and strategic consequences. An inflated valuation can deter informed investors and buyers who recognize when a price exceeds market realities, often resulting in stalled negotiations, prolonged market time, and even adverse tax implications for gift or estate planning purposes. Conversely, undervaluing the business can cause the owner to leave significant money on the table, eroding years of built-up equity and positioning the company as distressed or desperate to sell. A proper valuation should be grounded in market comparables, industry multiples, and adjusted financials such as Seller’s Discretionary Earnings (SDE) or EBITDA, ensuring both credibility and fairness in negotiations. A business valuation report is ordered for the following situations:
-
Mergers and Acquisitions
-
Selling a business
-
Buying a business
-
Buy/Sell Agreements
-
Business Planning
-
Partner buy-in/buy-outs
-
Retirement/Succession Planning
-
Employee Benefit Plans
Business Valuation Reports
Business valuation reports can be prepared for many different purposes. There are two main types: informational valuations (broker opinion of value reports) and certified valuations. An information valuation is an internal document for the company’s owners and stakeholders. A certified valuation report is used when the conclusions may be used in a legal proceeding or when findings are likely to be challenged. It is also used by outside parties to determine the value of the subject company.
Informational Reports
The Informational Valuation Report is a streamlined solution for businesses seeking insightful analyses at a cost-effective rate. It is built around a company’s actual value and is typically 20 to 30 pages long, written in plain English so that it can be easily understood. It is an actionable document designed to support various business needs, from establishing market prices to informing internal business decisions. Click the button to download an example of an Information Valuation Report.
Certified Business Valuation Reports
factors, and a comprehensive financial analysis. They’re used when scrutiny over value is anticipated or detailed support and explanation of the valuation is required. Certified Business Valuation Reports are 65+ pages in length and can be used to substantiate company information for third parties, including acquisitions, divestitures, IRS submissions, partner disputes, and bank loan reports.
Click the button to download an example of a Certified Business Valuation Report.
What’s The Best Valuation Report
