valuation

Why is Valuation a Good Idea?

Why is Valuation a Good Idea?

‘Business Valuation’ is a good idea because it is the process of determining the economic value of a business or company. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership and divorce proceedings. Often times, owners will turn to professional business valuators for an objective estimate of the business value.

Read more: Business Valuation http://www.investopedia.com/terms/b/business-valuation.asp

There are many reasons to have an up-to-date business valuation. For example:

  • You may need to sell the business due to retirement, health, divorce, or for family reasons.
  • You may need debt or equity financing for expansion or due to cash flow problems. Potential financiers or investors will want to see that the business has sufficient worth.
  • You may be adding shareholders (or one or more shareholders may wish a buyout). In this case, share value will need to be determined.

Regardless of the reason, how much your business is worth depends on many factors, from the current state of the economy through your business’s balance sheet. If for example, similar businesses in your area have recently sold, the value of your business will be determined in large part by the selling price of the previous sales.

Get It Done Right

Business owners should not do their own business valuation. This is too much like asking a mother how talented her child is. Neither the business owner nor the mother has the necessary distance to step back and answer the question objectively.

A Business Valuator (or anyone valuating your business such as an accountant) will use a variety of business valuation methods to determine a fair price for your business, such as:

Three Business Valuation Methods

  1. Asset-Based Approaches
  2. Earning Value Approaches
  3. Market Value Approaches

 

To know more visit thebalance website.

Contact Sage Solutions Philippines for business consultancy services. Just follow the link: https://www.sagesolution.com.ph/contact/

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