Appraisals

An appraisal is the most important step in buying or selling a business. There is nothing worse than selling for too little or paying too much for a business. Experience tells us that owners who sell without first getting an independent third party appraisal of their business's value consistently get lower offers than those with appraisals, and end up selling for less money. Industry studies have shown that businesses with an appraisal usually sell for a price more than 20% greater than those without an appraisal.

The appraisal becomes the most important tool used in marketing a business and negotiating the terms of a sale. It justifies the price to a buyer and shows them the return they will earn by investing in your business.

Independence is key to valuing a business. A buyer or lender will not rely on an appraisal performed by someone who is not independent, such as your accountant or the broker representing the seller. To be worthwhile the appraisal must be performed by an independent third party.

We have partnered with the company that performs all the appraisals for the largest SBA lender in the country in order to provide our clients with independent appraisals at significant savings. Our arrangement allows us to do all the interviewing of the business owners, the site survey, the recasting of financial statements, the gathering of comparable sale information, and the preparation of the business profile. Our appraiser then appraises the value once all the field work is done and issues the final bound report, which ends up saving our clients about 50% of the normal cost of such work. Better yet, it provides us with the intimate knowledge we need to be able to market your business successfully.

Even if you are not planning to sell your business for 3 to 5 years, consider having it appraised so you will know what you can expect to get when the time comes. Then you can plan for your retirement or a new venture without the guess work of not knowing what your company is worth. In the meantime, you will see what factors will influence your company's value and the steps to take to build towards a greater value at the time of sale.