Selling your Business: How to Conduct a Proper Valuation of your Business
As a business owner, you have intimate knowledge of all the ups and downs your company has experienced. That is valuable knowledge but may cloud your judgment when it comes to the valuation process.
There are 4 main reasons why it is advisable to hire a consultant to provide a consistent and fair valuation:
#1 Objective Results
As a business owner, remaining objective can be difficult. Often, there will be variables missed in the valuation process. A third party will be able to provide an objective valuation, including all the necessary variables. The value driver will also be determined by an independent party.
To complete the valuation it is necessary to normalize earnings. This calculation includes adjustments, which are best calculated by an outside party.
Business owners will naturally be protective of their business. A fair and accurate valuation requires transparency while maintaining a confidential relationship to sensitive information.
As the business owner, it is important to disclose all the details to your consultant – big and small. The greater the level of transparency, the more accurate the valuation will be. To ensure nothing is missed, a consultant will ask the questions needed to provide as accurate a valuation as possible.
#3 Dealing with Emotions
Taking the emotions out of the equation will provide an accurate valuation with all the T’s crossed and I’s dotted. When a business owner has spent their life building a successful business, they want to see their business grow and prosper – and there is no shame in that. Once emotion becomes part of the equation, the valuation can unintentionally be reported inaccurately. Hiring an expert with an objective point-of-view will put emotions aside to solely focus on the task at hand.
Not all consultants are created equal. Be sure to hire a third party who is familiar with your type of business. Equally as important is to ensure the firm you are hiring has the proper credentials and knowledge. Trusting your consultant, or team of consultants will make all the difference. Take as much time as you need to find the right fit.
Bedrock’s approach to our services reflects the work and dedication that you put into creating and building your business. We listen to each client and design a process that will meet their objectives while maximizing certainty of achieving the desired results. We have years of experience and expertise in helping business owners achieve their goals. Contact us today to get the conversation started – www.bedrockcap.ca