There are many reasons a business owner may want or need a business valuation – including negotiating a merger or business sale, considering new shareholders, estate planning, or marital dissolution – but there are only a few accepted business valuation approaches. Often times owners are convinced there is a single way to value their business, but are surprised to discover there are several methods through which a valuation is determined. Although choosing the most effective method is best left to professionals, business owners will benefit from having a high level understanding of the different methods and how they are used to arrive at a final value. This is especially useful for those seeking to sell their company as it will allow them to identify ways to enhance the long term value of the entity. To help clients, prospects and others, Sikich has provided summary details of the various methods below.
According to the leading business valuation associations, there are three major approaches to business valuation:
Unlike many other services an accounting firm offers a business valuation is not an exact science. Depending on the valuation method utilized there are many variables that need to be considered and assessed. For this reason, it’s essential to work with a valuation professional that has experience with your company type and industry. A fair and objective valuation is necessary for the business owner to have the best idea of what the company is worth today for planning and other purposes. Looking for assistance with a business valuation, then Sikich wants to help! For additional information please contact Ray Lampner, CPA, at 330-572-8014.
This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.