The most common reason for performing a company valuation is in preparation for a sale, merger or acquisition. Other needs include issues pertaining to gifting, estate tax, eminent domain, partner dispute, marital dissolution and employee stock ownership plan (ESOP). The valuations required for these events vary, and depend upon intended use and scope of engagement.
ABI offers both USPAP compliant and non-compliant valuations based on the size of the business and purpose. USPAP establishes requirements for impartiality, independence, objectivity, and competent performance, and while any valuation service we provide strives to achieve all of these attributes, certain requirements of USPAP increase the complexity of the report and thus impact price.
Many business owners leave substantial money on the table when they sell their companies – most often because they do not understand the company’s value. For that reason, the valuation process is a true asset to the business owner and a thorough, professionally prepared valuation will assist to:
- Identify Key Value Drivers. There are many benefits to understanding the major strengths and weaknesses of a company. It allows the owner to solve both obvious and hidden problems prior to the selling process. In addition, opportunities for growth and phantom assets can be highlighted and presented in the best light to buyers.
- Determine Reasonable Selling Price. Many owners rely on general rules of thumb, multiples, casual advice or other unreliable sources. If the owner’s expectation of value is too high, it will prolong the selling process until a price concession is made. If the price is too low, money is left on the table.
- Allow For Negotiation Leverage. Most buyers are sophisticated and experienced. They will conduct a rigorous analysis and will look at those factors and value drivers to determine an offering price. The seller and the Advisor must be prepared to utilize all key facts to support a maximum sales price and beneficial deal structure.
ABI works with several nationally accredited appraisers, typically through the American Society of Appraisers (ASA), who provide accurate, impartial and credible reports. ABI is also trained to provide a written Opinion of Value or Most Probable Selling Price Report (MPSP). Contact your ABI Advisor for a discussion regarding which report is best suited for your needs.
