The value of valuations

Why you should find out how much your business is worth

As a business owner, you may have considered having a business valuation conducted for your company. But do you know what is involved in having your business appraised? Do you know the benefits of business valuations and do you know how to decipher valuations?

A business valuation involves estimating the market value of an ownership interest in a business at a given point in time. This value includes all the economic benefits derived from a company's physical assets (trucks, tools, etc.) and intangible assets (customer list, reputation, trade names, key employees, etc.). A valuation estimates the price a buyer and seller would negotiate for a business.

The general thought is all company assets are used to generate company earnings. If a company is to be valued, all these assets must be considered. A business valuation is an art and science where quantitative financial techniques and qualitative analyses of a business, its industry and economy are performed to determine its value.

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