in Financial Services - 30 Dec, 2016
by Patrick Cook - no comments
Advantages Of Business Valuation


Current business valuation needs to be a high priority. It is vital to establish a stock price for business transaction for business transactions like buying and selling agreements, dissolutions this includes liquidation or estate planning. You can use it to defending minority stockholder claim. If you are going to be selling or raising equity capital you require a high valuation. There are various popular approaches when it comes to valuation. Market approach helps in measuring worth of your company against various comparable public companies. Financial buyers use income approach that is based on future financial returns. Cost of approach that is used will measure replacement cost of asset. Businesses which are privately held are difficult to evaluate because they are no public companies available that you can use as comparables. Matters which are related to minority shareholders or depending on a single key manager will offer various price calculations.

During the tax agent Parramatta process the manager will provide details about the company history, experience of the managers and owners. The company operations are going to be analyzed thoroughly this includes customers, market niche, their profitability, skills, values and development strategies of the new business. Financial analysis is going to be based on five years of balance sheets as well as income statements. There are some recasting that are going to be done in order to address assets and liabilities that are hidden. The trend of the company is going to be compared to those in this industry.

There are a few methods that can be used in arriving at final price for every share of stock. An agreed price is established for buying and selling contracts like stock repurchases. There are other methods which are based on the asset value. For instance tangible book values use net worth of the business from the balance sheet. Adjustments are performed for intangible items like good will and deferred costs. Share price is based on the number divided by total number of shares. Valuation of the business is based on how much somebody is going to pay for it. But a calculated valuation is vital to prevent any money leaving the table. Business owners who want to sell their business at any point, professional business valuation should be the first step. If the business is going to be overvalued it is not going to sell. If the business is going to be undervalued the seller is not going to notice return on investment. A business that is priced properly is going to sell and both parties are going to walk away filling satisfied. You have spent a lot of years developing the business and it should be sold in a good price. In today’s world professional business valuation is a must because sellers are going to be protected by getting a fair price for the business.

Valuing a business is not a simple task and there are pitfalls especially if you do not have any experience in business valuation. If you know the basics this will help you to understand how you will value your business or how your business is going to be valued by an expert. But if you have no idea about this look for a tally partner.