Business Valuation 101 - All About Business Valuations

Key Terms and Concepts, the Business Valuation Process

Every business should have on hand a business valuation, which is updated every year. Like a current resume and business plan, a current business valuation can allow you to take advantage of opportunities, protect your family in case something happens to you, and allow you to move quickly when you are ready to sell your business.  

What is a business valuation? 

It's a process similar to an appraisal for a home sale, in which a business appraiser inspects and analyzes the entire business. This process usually includes valuation of assets (including depreciation) and other factors. 

Businesses can be valued in several ways, depending on the circumstances of the valuation (sale or bankruptcy, for example). If a business is being offered for sale, more than one valuation method may be presented, s part of the business valuation report.

Sections of a business valuation report, including an economic analysis, industry analysis, and discussion of valuation methods used.

This article discusses

  • Reasons for getting a business valuation,
  • How an appraiser works and how to find one, 
  • Documents in information you'll need to provide the appraiser, 
  • How intangible assets provide value to a business, and
  • How financial statements are adjusted before and after a business valuation.

1
Why Do I Need an Up-to-date Business Valuation?

Things happen, in business as in life. Just as you should always have a resume ready, and you should keep your business plan updated, you should prepare a business valuation and update it every year. Here are some reasons why you might need that business valuation report. More

2
Can I Use a Business Appraiser to Value My Business?

An appraiser is an individual who estimates the value or worth of something. An appraiser sets value on property or other assets, including the assets of a business.
There are many different kinds of appraisers, many of whom specialize in various types of appraisals. This article discusses how to find and use a business appraiser.   More

3
What Information is Needed to Prepare a Business Valuation?

If you are considering selling a business, here is a list of documents and information you will need to put together. Pay particular attention to the first two items: 1) What is being sold? and 2) What is NOT being sold? More

4
How Intangible Assets Work in a Business Valuation

Intangible assets are those assets without physical form. These assets include intellectual property like patents, trademarks, and copyrights. They also can include contracts and licenses, technology, and  customer relationships. 

No business valuation should be undertaken without considering the value of intangibles. This article discusses the different types of intangibles and how they provide value to a business.  More

5
How are Financial Statements Adjusted For a Business Valuation?

Before a business valuation report is prepared, the company's financial statements are adjusted, to remove discretionary items and one-time occurrences, and to bring accounts to current market value. More