Business valuations are typically determined by an accountant, a lawyer specializing in business transitions, an investment banker, or a professional business appraiser. Using a professional should ensure a smoother transaction – and fewer surprises.
There are several methods to determine an accurate valuation of a business. Business appraisers often say that their work is just as much an art as it is a science. Still, the accuracy of their results rests squarely on the reliability of the financial information they have to work with.
Factors that play into these assessments include:
- The state of the economy
- The growth prospects of your industry
- Your company’s outstanding obligations and/or its need for capital expenditures to stay competitive
- Whether or not you have a pressing need to sell