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Business owners need to recognize that operating a business on a day-to-day basis is not the same thing as preparing it for sale.  There are many steps necessary in the planning process and it all starts with the AWARENESS of that fact.  It is in the best interests of a business owner to get professional advice early – from a business broker, mergers & acquisitions advisor, exit planning consultant, or business coach – to understand what may need to be done for their business.  And the business owner must then begin to take those steps in order make the business sellable at the maximum value.

What a better place to start building this awareness than with a Business Valuation?!  (and/or Machinery & Equipment Appraisal, if the business is capital-intensive)

To find out more about the types of Business Valuations and M&E Appraisals we offer, contact us at 888-750-5259 or by e-mail at info@NationwideValuations.com

Curious to see how sellable your business is today?   Get your free Sellability Score — click HERE, or follow the link at the bottom of our home page.

Marsha Golgart AIBA, CMEA, CEPA, ISBA – Nationwide Valuations – (303) 484-3033     (303) 374-6771 (fax)
marsha@nationwidevaluations.comwww.nationwidevaluations.com

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The value of a business interest is impacted by a number of factors, many of which may change from year to year.  Factors that impact the value of a business include the following:

  • Financial performance—If a business has poor earnings capacity or is on the verge of bankruptcy, the value of the business is going to be negatively impacted.  If the business has strong historical earnings but is currently experiencing a downturn due to external factors such as temporarily higher steel or energy prices, the value of the business may or may not be negatively impacted, if the business appraiser can reasonably conclude that the favorable earnings trend will resume in the future once these temporary factors pass.
  • Growth prospects—There are two ways a business can achieve profitability — [...]

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The most commonly cited benefits of an annual business valuation policy include the following:

Provides Accountability and Performance—An annual business valuation of a closely held firm enables the shareholders to see the value that is being consistently created or destroyed by the management of the firm in its execution of the corporate strategic plan.

Fulfills Reporting or Compliance Needs—As with a 401k rollover, the value of the shares in the privately-held company must be established for annual reporting purposes.  An annual business valuation provides the data necessary for the reporting required by ERISA and the Internal Revenue Code. [...]

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The Hierarchy of Recurring Revenue

One of the biggest factors in determining the value of your company is the extent to which an acquirer can see where your sales will come from in the future. If you’re in a business that starts from scratch each month, the value of your company will be lower than if you can demonstrate the source or sources of your future revenue.  A recurring revenue stream acts like a powerful pair of binoculars for you – and your potential acquirer – to see months or years into the future; creating an annuity stream is the best way to increase the desirability and value of your company.

The surer your future revenue is, the higher the value the market will place on your business. Here is the hierarchy of recurring revenue presented from least to most valuable in the eyes of an acquirer. [...]

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