Bakersfield Office    
661 527 9080
Central Coast Office
805 585 5760

FAQ

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Frequently Asked Questions

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Q: What is a business valuation?

A business valuation sounds complicated, but the concept is simple. A business valuation analyzes relevant information to develop an informed value for an asset. The asset could be an entire business or an interest in a business. It could also be the value of a liability, such as a promissory note.

The core of a financial and valuation analysis is to determine the expected future cash flows of the business and the amount of risk in achieving those cash flows. A business valuation specialist reviews all pertinent operational and financial information when analyzing the financial benefit stream and the risk factors.

Q: Are there different types of business valuation services?

Yes. In our experience, most clients want a fair market value appraisal. This means the client wants to see what the value would be if the company were to be sold, where the buyer and seller can access the information to reach an “arms-length” agreement.

We also provide investment value appraisals. Investment value is the value to a particular owner, and we typically perform these for potential buyers of businesses.

Q: Are there different types of valuation reports?

Yes. We issue detailed valuation opinion reports if the report will be submitted to a tax authority such as the IRS. If our client relies only on the valuation report, we’ll provide a restricted valuation opinion report. A restricted opinion report is based on the same level of analysis as a detailed opinion report, but it is shorter and lower-cost. We typically issue restricted opinion reports for shareholder transaction and management planning purposes.

We also perform business valuation consulting engagements where we provide our conclusions in an executive summary format. These conclusions are value estimates rather than opinions of value. We typically perform these engagements to give the client a preliminary idea of value before they invest in an opinion report. These reports are commonly used for transaction pricing, marital dissolution, and litigation settlements.

Q: I want a general idea of what I can sell my business for. Aren’t there rules of thumb I could use instead? How about those websites that give me a valuation of my company for free?

Many people start with valuation rules of thumb, usually multiples of revenue or earnings. These rules don’t consider a company’s specifics. By relying on a rule of thumb, you risk leaving money on the table or overpricing the company and being unable to sell it. By getting a business valuation, you’ve hired an expert to consider your business’s specific profile and provide an informed value.

Q: What makes you qualified to do business valuations?

Our partners are accredited to perform business valuations by the American Society of Appraisers (ASA) and the American Institute of Certified Public Accountants (AICPA). The business valuation credentialing process involves coursework, exams, and certifications, and we’ve each performed thousands of hours of business valuation work.

Since two leading business valuation bodies credential us, our reports are written in compliance with widely recognized business valuation standards: the Uniform Standards of Professional Appraisal Practice (USPAP) and the AICPA’s Statement on Standards of Valuation Services No. 1 (SSVS 1).

Q: How do I go about getting a business valuation?

You’re here reading this Q&A, so you’ve already found us. Call or email us to discuss your situation, and we’ll tell you how we can help![/vc_column_text][/vc_column][/vc_row]

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