Useful Resources
FAQs
What is the importance of a third-party business valuation?
An independent, professional business valuation will eliminate hunches and guesswork, allowing a business owner to know what their business is truly worth. It will identify tangilble and intangible value of a business to inform existing business owners, potential buyers, investors, lenders, and other related parties. Without a professional business valuation, a company's value is derived from heavily biased opinions (typically the owner or their CPA) and is not respected or recognized during significant financial engagements.
How can your company offer nationwide, in-person meetings while most "national" valuation firms have only one office?
We recognized that the United States small business market was not being given the opportunity to work with a nationwide business valuation firm via face-to-face support and service delivery. FairMarketValuations.com was created to fulfill this demand through an exclusive partnership with Business Brokers Network (BBN), the nation's largest network of business brokers, and RWS Business Valuations, a leader in business valuations. The national infrastructure of BBN has allowed for our nationwide service deployment.
Who performs the business valuation?
RWS Business Valuations conducts the actual business valuation through its advanced systems, applications, processes and technologies.
The BBN national affiliate (Financial Recasting Consultant) will provide confidential and discreet, in-person advice, services, and support. Their responsibility is to ensure that all necessary information about your business is gathered, reported and accurately prepared for our valuators. Their purpose is to become intimately familiar with your business through face-to-face meetings and investigations with you, the business owner. Once they have completed the information discovery process, all packaged information is sent directly to RWS Business Valuations headquarters in Texas so that the business valuation can commence. Once the valuation is complete and reviewed with the BBN affiliate, they will hand deliver the valuation to the business owner and fully explain the findings, recommendations and price justifications.
Is there a difference between "book value" and "fair market value"?
Yes! There is a significant difference between "book value" and "fair market value".
"Book value" is an accounting view of the assets of the business, but it excludes the income those assets generate. This perspective deducts the values of items owned by a business for tax and liability purposes. As a result, "book value" does not provide an accurate economic perspective of the entire business and its operation.
"Fair Market Value" identifies the true value of a business, its assets and their income generating capacities. There are many techniques involved in calculating the "fair market value" of a business to ensure accuracy and fairness. Consequently, this perspective is what a willing buyer and willing seller would agree to when a business is sold. For more details on "fair market value", click here.
Why can't my CPA appraise my business?
The majority of CPA's are not focused, experienced or fully-capable of conducting a high-quality, cost effective business valuation. Most have a limited knowledge base in conducting market research, assessing market comparables, and understanding the dynamics at play in buy-sell transactions. In addition, your accountant is intimately familiar with your situation and biased in your favor, thus true third party independence is not maintained, which most buyers or investors absolutely require.
In contrast, there are CPA firms that have a specialization in business valuations but those are typically geared towards very complex events such as 409A compliance, tax issues, litigation, etc. These types of valuations typically well exceed tens of thousands of dollars.
How much does a business valuation cost?
Business valuation prices can vary dramatically from firm to firm. This is due to a provider's areas of expertise, available resources, geographic restrictions, infrastructure, etc. Traditionally, professional business valuations will cost anywhere from $5,000 to $30,000+ based upon complexity. Inc.com has a great article on "How much should a business appraisal cost?".
Fair Market Valuations is proud to offer its business valuation services for engagement fees typically ranging from $4,000 to $7,000. The frequency and volume of our nationwide services enables us to offer you top-notch business valuations for a very reasonable rate. In addition to receiving industry-respected, professional business valuations, our clients also receive significant benefits from the face-to-face, exploratory meetings they have with our professional experts.
How often should I have a business valuation conducted?
In our opinion, business valuations should be updated every 12 months. This approach is really dependent on the purpose of the valuation. We specialize in assisting small to medium sized businesses truly understand their market value in order to sell, buy or strategically grow their respective company. Under these purposes, we recommend that valuation updates occur on a quarterly or semi-annual basis with the assistance of our dedicated professional experts. If these are not performed, then annual valuations would be the next best thing. If the valuation is for a one-time event, then regularly scheduled updates are not required.
If you have additional questions about business valuation and its importance to your business, please contact us today or call us at 877-VALU-BIZ.