Business valuation is a process and a set of procedures used to evaluate the economic value of an owner’s interest in a business. Business Valuation is mostly used to:
* Estimate the selling price of the business
* Allocate a business purchase price
* Establish a formula for estimating the value of a partner’s or owners interest for buy/sell agreements
* Resolve disputes related to estate and gift taxation
* Estimate the value of business assets
Before the value of a business is measured, the valuation assignment must indicate the reason for and circumstances surrounding the valuation. These are formally referred to as the premise value and the business value standards.
Major Methods of business Valuation
There are many techniques followed in Business Valuation in St. Cloud, MN. The most common methods used by professional and experienced business brokers include:
Merger and Acquisition Valuation (M&A Valuation)
This is method of Business Valuation in St. Cloud MN is usually done for transaction purposes. It is mostly done before the larger business entity can decide to take over the smaller business.
Formal Business Valuation
This entails a financial analysis and review of the balance sheet with the support documents containing the review of the company’s historical and project earnings.
Value analysis is primarily done to determine the overall value of the business. Value analysis helps to determine those processes which are adding value to it and eliminate those processes which are not adding value.
Letter of Opinion
The letter of opinion is a restricted use valuation technique intended for small sized companies with less sales less than $250,000. The basis of this valuation is a market comparison with like business within an industry.
Documents Required During a Business Valuation
There are many documents that a professional business advisor will always ask for prior to Business Valuation in St. Cloud, MN. Some of these key documents include:
* Financial statements such as balance sheets, income statements, statements of changes in financial position,
* Company documents such as articles of partnership, corporate minutes
* List of any patent, trademark or corporate
* Resumes of key personnel
* List of licenses
There are so many reasons for Business Valuation in St. Cloud, MN. However, it is always important you ensure you engage the right business advisors, as this will allow you to know the real value of your business.