Is your business worth 3X sales? Or 2.5X EBITDA? Or what about 2X gross or assets plus one year of sales? The fact is, a single ratio is always wrong! For accurate business valuation Pennsylvania, there are many factors to consider. Still, many business owners make the mistake of using a single ratio which can lead to leaving money on the table after a sale or they value the business to high it will not sell.
A Neumann and Associates with 25 years of experience is a reputation firm that can assist with business valuations Pennsylvania. 3 operations are evaluated during a business valuation, a review of comparative values in SIC Code, review of markets and competitors and weight assets, cash flow and market transaction. Only a certified business valuation from a third party can come up with a true fair market value.
A couple things are critical when obtaining a business valuation in Pennsylvania. First, confidentiality is of upmost importance. Next, it must be a certified business valuation and it must be conducted by a third party. A valuation performed by a party representing the buyer or seller will not be seen as objective or taken serious by the other side in a transaction. Only a third party can provide an objective and accurate true market value.
Now, there are some different methods to determine fair market value. You have an asset based approach using book value and good will. There is also the income based approach which uses the capitalization method and excess earnings. And you also have the market based approach using revenue, discretionary cash flow and normalized EBITDA.
So what drives value in a business valuation Pennsylvania? There are many value drivers, here are a handful: Profitability, consistency of growth, diverse customer base, management information systems, accurate P&L reporting system and attractive facility are all value drivers.
A common questions, is when should a business owner obtain a business valuation? For a business owner looking to sell, a certified business valuation is critical to obtain up front. The requirements for a valuation are 3 years of records, approximate asset listing, a mental summation of benefites and 1.5 hours of uninterrupted time at an offsite location to preserve confidentiality.
Why is a valuation so important? The buyer will take you serious first. There will be justification for the asking price and the valuation will aid in the buyer obtaining financing. The business valuation Pennsylvania also provides a lot of pre-offer due diligence. Additionally, a valuation is less than 0.5% of a business transaction and reduces potential of seller’s remorse.
It is estimated that 50% of 7 million business owners will sell in the next 15 years. Of these, 80% are not sold due to poor representation. 75% of business owners actually have no idea how they will exit from their business and most are universally wrong about the value or salability of their business.