Thinking about retiring or selling your business? With some careful planning and professional advice, your business might be worth far more than you think. Or you might have unrealistic expectations.
Many professional advisors across numerous specialties put themselves forth as business appraisers, business valuation specialists or some similar moniker. There are professional certifications and designations for advisors who work in the valuation and appraisal field. But the lack of a certification or designation doesn’t mean an advisor lacks the experience and skills to appraise or value your business. Regardless of designations or certifications, verify the advisor has provided the services you seek and has assisted clients with defending the appraisal or valuation if legal or tax issues arise.
If you want to work with an advisor with an industry certification or designation, here are some organizations to consider:
The National Association of Certified Valuators and Analysts — www.nacva.com — designates Certified Business Appraisers (CBA), Master Certified Business Appraisers (MCBA) and Certified Valuation Analysts (CVA).
The International Society of Business Appraisers — www.intlbca.com — designates the Business Certified Appraiser (BCA).
The American Society of Appraisers — www.appraisers.org — designates the Accredited Senior Appraiser (ASA).
The American Institute of Certified Public Accountants — www.aicpa.org — offers the Accredited in Business Valuation (ABV) designation.
Some of the information a valuation consultant or appraiser could want from you includes:
Financial statements — audited if available — for the last three to five years.
Year-to-date financial statement.
Federal, state — and local, if applicable — business tax returns for the past three to five years
Depreciation schedules for company owned buildings, vehicles and equipment used in business operations.
Other items determined by the nature of your business, including client lists, databases and proprietary software.
Information about and access to your website.
Copies of recent appraisals for business-related equipment and property.
Copies of leases for buildings, equipment and property.
Information about any pending or ongoing financial, legal or tax issues or obligations.
Photographs of buildings, equipment and job sites.
Copies of brochures and other published material about your company.
If you seek business funding, most lenders working with the U.S. Small Business Administration require a valuation from a credible firm.
If you’re considering buying an established business or franchise, an appraisal or valuation can provide peace of mind you’re probably not overpaying.
Disclaimer: The preceding information is provided for general educational purposes. It’s not intended as accounting, legal, tax or other advice. Always consult with a qualified, licensed (if applicable) business appraisal or valuation consultant, legal advisor or tax professional when you’re considering buying or selling a business.