When would I need a business valuation?

Good question.  Whether you are a small business owner or someone who serves a small business owner—there will come a time when knowing the value of that business will guide and direct key decisions for all parties involved.

Here is a list of the most common scenarios where a business valuation would be needed:

  • SBA Lending
  • Listing a Business for Sale
  • Business Planning
  • ESOP
  • Gift Tax / Estate Tax
  • Corporation Tax Filing Status
  • Partner Buy-Outs / Disputes
  • Marital Dissolution

What are the different types of Business Valuations?

Complete Appraisal

The most thorough presentation of a business valuation, a Complete Appraisal, looks at every aspect of the business and documents the methodology and assumptions used to arrive at the value conclusion.  This level of valuation comes with significant depth and detail. If a valuation is expected to be challenged or used as part of litigation, the Complete Appraisal would be used.

Summary Appraisal

A summary appraisal involves the same level of investigation and analysis as the Complete Appraisal, but delivers a summarized version of the salient information, which takes less time to prepare, thereby reducing costs.

Calculation of Value

In some cases, a basic understanding of the value of a business will be sufficient for the task at hand.  Known as “Value Calculations”, a Calculation of Value is NOT an appraisal, but merely a “calculation of value” based on a limited amount of investigation and due diligence. This kind of report is typically used for management planning and other less formal internal purposes.

Appraisal Review

When you’d like a second opinion about a valuation report, an appraisal review offers commentary and critique that could lead to a better understanding of a valuation prepared by another party.