What is a business valuation?
Business valuations, market appraisals… you may have heard these terms floated around during business meetings, but how do they differ from one another? Many business owners are of the impression that they require a business valuation prior to listing their business for sale. However, what they actually need is a business appraisal. So what is a business valuation? And how does it differ from a business appraisal?
Lucky for you, we’ve already written a blog about that – you can read it here!
So let’s dive a little deeper into business valuations and answer the question in detail…
What is a business valuation?
Commonly perceived as the process of finding out the business’ value, before listing it for sale. A business valuation is a much more detailed process when compared to a business appraisal. Commonly utilised for legal proceedings (such as legal separations, court proceedings and tax or insurance reasons), a business valuation must take into account a variety of factors, such as:
- Historical profits and performance
- Current financial position and cash flow
- Future profitability and prospects
- Risk assessment
- Current market conditions and competitor analysis
- Fair value VS. fair market value*
*Fair value VS. fair market value
We thought you might want to learn a little more about this… The fair value of a business is essentially the fair value of the business alone, whereas the fair market value of the business is when you take into account other external factors. For example, a fair value of a bespoke wooden box may be the sum of its parts and the labour involved in creating it. The fair market value on the other hand may be more, as the item was featured in a prestigious home decor magazine and that type of wood is not easily available to competitors.
Where does Core Business Brokers come in?
The team at Core Business Brokers value businesses all the time. The type of valuing we do, is called a business appraisal – and that’s the style of valuing that is implemented before listing a business for sale. Although we don’t currently offer legal business “valuations” as mentioned above, many reputable, Australian business valuers contact us for our input when conducting their research when forming their valuation report. Why? Because with over 90 years’ of industry experience combined, the Core Business Brokers team knows what businesses are worth.
With experience in an abundance of industries all across Sydney, NSW and beyond – our team go the extra mile when it comes to conducting our business appraisals. Want to know what your business is worth? Click here to get the ball rolling.
In summary
Business valuations are detailed snapshots of the business in question, and they provide the Government and ATO with a more accurate picture of the business value. If you’re looking to sell your business and don’t require an in-depth business valuation, contact the team at Core Business Brokers today.
Our team of experienced Business Brokers can appraise your business before listing it for sale. We’ll take into account many factors and come to a realistic, yet achievable sale price that we believe in. Contact us to begin your business sale journey here, or give us a call at (02) 9413 2977. Alternatively, email [email protected] or [email protected] to discuss your options.
