 Business Valuation WHY IS A BUSINESS VALUATION NECESSARY? In all likelihood your company is your largest asset, and that is why it is extremely important to know exactly how much your business is worth. However, determining how much your business is worth can be an arduous task. Unfortunately, there are no industry formulas that will accurately provide the value determination that your company needs. At MSPC, we understand the complexity of an accurate and detailed business valuation and we have the expertise to perform the job efficiently. REASONS FOR A BUSINESS VALUATION: The valuation of a business may be required in many different circumstances. Listed below are a few of the motivations for conducting a business valuation.
Just as there are many reasons for conducting business valuations, there are also many factors in determining the value. The valuation process is a combination of the financial position of the business, an analysis and evaluation of historical data, a forecast of the company, industry and economy, as well as the reason for the valuation. TANGIBLE VERSUS INTANGIBLE ASSETS: When conducting a business valuation it is essential to analyze not only the physical assets of the company but the intangible assets as well. The value of a business includes obvious elements such as real estate and equipment, but it is often the value of the intangible assets that is more significant. Intangible assets include copyrights, trademarks, customer lists, physical location, and the business goodwill. Identifying the intangible assets is easy, the difficulty lies in understanding the various dynamics of the business at hand. The valuator must be able to interpret the future profit potential and the financial health of the enterprise as well as company strengths and weaknesses, the competitive environment, marketplace expectations, and management competence. BUSINESS VALUATION AS A MANAGEMENT TOOL: An often overlooked benefit of obtaining a business valuation is its role as a management tool. For a business to maximize its potential, and therefore its value, it needs to be operating at its highest efficiency. A properly conducted business valuation helps management focus on particular areas by providing them with insightful information about strengths and weaknesses. SELECTING A VALUATION PROFESSIONAL: Valuing a business is a complex and time consuming task that requires a valuation professional who consistently demonstrates his knowledge and competence in business valuations. Affiliations with valuation organizations such as the National Association of Certified Valuation Analysts (NACVA) are also important because of the industry standards that members are required to adhere to. Dean Scaglione, a principal at MSPC, and a Certified Valuation Analyst (CVA) obtained his certification from NACVA by completing its training program and by passing a comprehensive two part examination. |
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Contact Angelo J. Coppolino, Principal-in-Charge, for more information on our Business Valuation Services. |
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