frequently asked questions:
Q: SHOULD I HAVE A VALUATION DONE EVEN IF I DON'T PLAN ON SELLING MY BUSINESS RIGHT NOW?
A: You may need a business valuation for a number of reasons: management planning, financing, estate planning, succession planning, buy/sell agreement, employee incentives, litigation, divorce, or other reasons. A valuation often helps in the management planning process as business owners learn what drives value and ways to increase value. Also, most business owners get peace of mind by knowing how much their business is currently worth.
Q: Is the information kept confidential?
A: We understand the sensitive nature of a company's internal information and treat the information with the utmost confidentiality and care. Information related to our clients is never discussed or released to outside parties without prior authorization. To ensure confidentiality, we always sign binding Non-Disclosure agreements with every client.
Q: What documents are needed to have a valuation completed?
A: For the initial meeting and valuation discussion we typically request information regarding:
The company's financial history and outlook
This is usually the last 3-5 years of tax returns,
and the last 3-5 years of balance sheets, and profit and loss statements
Q: How long does it take to have a valuation completed?
A: Once the requested documents and information have been provided, it generally takes 1-2 weeks to complete the valuation for most businesses. When the situation requires a faster turnaround, we work to prioritize the project and complete it within the client's needed timeframe, whenever possible.
Q: I am selling my business and have already reached an agreed upon price with the buyer. Is there any reason to have a business valuation completed?
A: You have one opportunity to sell your business. Confirming that you are receiving an equitable price for the business can provide assurance and peace of mind. Also, if the buyer is looking for bank financing, most banks finance closely held business loans only if they can include the Small Business Administration's (SBA) loan guarantee.
Q: How much does it cost?
A: The cost depends on a number of circumstances specific to the business, but most basic valuations can be completed for anywhere from $500 to $1,500.
We find it best to meet initially, typically at minimal or no cost, to gain an understanding of the purpose of the valuation and the nature of your company. This allows us to make an informed proposal of expected fees.
A few things we can discuss during our initial meeting are:
The purpose of the valuation
The complexity of the project
The quality of financial and other information
The availability of documents and information
The complexity and dispersion of ownership and equity rights
Q: Can my CPA appraise my business?
A: While most accountants concentrate on accounting or tax work, a CPA probably can appraise your business. However, most accounting firms have one or two individuals, trained in accounting, to work on valuation projects, when they occur. Compare this to a Quantum Consulting that has a professional with diverse training/background in small business accounting, law, finance and marketing, while applying this training to the business valuation exercise. Additionally, for purposes of divorce, other litigation or due diligence, the company's CPA can be seen as too involved with the business to provide an independent opinion (conflict of interest). Additionally, some accountants do not have the necessary valuation training, credentials or experience to produce a credible analysis.