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"I feel like I already know what my business is worth."
We agree that you are plugged into your business and have applicable perspective concerning its value. As we work along side you during the business appraisal process, we will strongly draw on your personal knowledge of the company.
Right now you are probably Googling the approaches just mentioned. We encourage you to educate yourself on the appraisal process because an informed client is a helpful client.
One of the many reasons you should hire us to perform your business appraisal is because we are specifically educated in the many nuances of appraisal that cannot be understood by reading articles or websites. Also, beyond the three main approaches there are thousands of other factors to consider along the way that we have spent the past 20+ years becoming accredited, educated and certified in to make us experts in this field.
"But you don't know me, how can you understand MY company?"
We want to get to know you as much as we'll get to know your company. You've built a company with your own sweat equity and a lot of your personality will be evident in the way the company operates. Which is why site visits & interviews are such a vital part of what we do. We will earn your trust because we appreciate the importance of your company.
"Is an Appraisal worth the cost?"
We have witnessed too many people value their own company without expert assistance and end up missing out on the true potential of their company's value. Many factors are easily overlooked by the untrained valuator, e.g. entity goodwill vs personal goodwill, industry trends, transactional data and lack of marketability discounts to name a few.
The area in which every appraisal is similar is the three approaches that are used in the appraisal process:
Income Approach: We appraise your business on its past performance and its projected earning going forward based on the trends of the company, the industry/economy as well as other factors.
Market Approach: We appraise your business based on what similar companies of comparable size have recently
Asset Approach: We appraise your business based on the current assets in the company's possession.
Not all three appraoches are equally applicable to every company, however they can still be used as a sanity check for the value we determine. Similar to the varying level of importance each approach has from case to case, the appraisal process itself varries based on the purpose of the business appraisal.
Divorce: In divorce we follow Texas Pattern Jury Charge 203 which requires a fair market value abscent a covenant not to compete. This valuation must be defentable in court and thus require more information and time. A litigation support valuation includes personal and entity goodwill as well as indepth analysis of a company's accounting.
Buy/Sell: If you are looking to buy or sell a business the appraisal process is less extensive as we mostely need a defendable open market value for your business as it currently stands. Buy/Sell valuations take less time and are used for brokerage negotiations, buying out a partner, merging businesses or gifting a percentage ownership to family members. More Information on Business Brokerage.
409A Compliance: Employee held businesses must have their business appraised yearly. These valuations are less costly after the first year as they are simply updated with the current year's numbers.
More Information on 409A