Free Business Valuation
Know the True Value of Your Business with Horizon Business Brokers
Your Business with Horizon Business Brokers Get an Accurate Business Valuation Report for Free Today
Are you curious about how much your business is worth in Richmond, VA? Are you planning to sell your business and want to get an accurate idea of its market value? Horizon Business Brokers can help you with a free business valuation report.
With years of experience in the industry, Horizon Business Brokers has helped many business owners determine the true value of their businesses. Our team of expert business brokers and valuation professionals use a comprehensive approach to provide you with an accurate and reliable valuation report.
The first step to selling your business is to establish a value and most probable sale price. Horizon Business Brokers works with business owners to help them determine how much their business is worth and what they can reasonably expect to receive when their business is listed for sale. There are several methods to value a business and we guide business owners through the most common and generally accepted business valuation practices. Whether you are looking to sell a business now or in the future, the best way to get started is to understand what your business is worth so you can obtain the highest value when you are ready to sell.
Value Your Business: In order to determine the value of a business, we need to determine two things: what a business owns and what it earns.
What a Business Owns: Tangible and intangible assets. The tangible assets are the furniture, fixtures, equipment, inventory, and real estate a business owns. The intangible assets can include the business trade name, contracts with customers, relationships with vendors and suppliers, client lists, employees, leases, licenses, policies and procedures, recipes, trademarks and patents.
What a Business Earns: What a business earns provides a certain financial benefit to the owner. The benefit generally comes in the form of business profits and a salary to the owner. It can also provide the owner with fringe benefits such as health insurance, a company car, or a retirement plan. Interest, Depreciation, and Amortization is also taken into consideration when determining what a business earns as calculated in establishing a business’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
What is a Business Valuation
A business valuation is the process of determining the economic value of a company or organization. This is typically done by analyzing the business’s financial data, such as revenue, profit, and assets, as well as considering the industry and market trends.
Business valuation is essential for several reasons. Firstly, it can help business owners make informed decisions about their operations, such as deciding on expansion or investment opportunities. It can also help owners negotiate fair prices when selling or buying another business. Additionally, a business valuation is often required when seeking funding or loans from investors or financial institutions.
Why Get a Business Valuation?
Knowing the true value of your business is essential for various reasons, including:
- Preparing for Sale: If you plan to sell your business, knowing its actual value can help you set a realistic asking price and negotiate a fair deal with potential buyers.
- Estate Planning: A business valuation report can help you plan your estate and ensure that your business assets are distributed fairly among your heirs.
- Insurance Purposes: A valuation report can help you determine the amount of insurance coverage you need to protect your business assets.
- Partnership Buyouts: If you have partners in your business, a valuation report can help you determine a fair buyout price if a partner leaves or is retiring.
Standards of Valuation
When it comes to business valuation, you need to be aware of different standards of value. Here are the four standards of value that Horizon Business Brokers uses for business valuation:
Fair value, also known as special value, is the value of your business to a specific buyer. This value takes into account the unique characteristics of your business that would make it valuable to a particular buyer, such as intellectual property, customer relationships, or location.
Investment value, also known as going concern value, is the value of your business to a hypothetical buyer interested in operating the business as it currently exists. This value takes into account the expected future earnings of the business and the risks associated with those earnings.
Liquidation value is the value of your business if it were to be sold in parts. This value is typically lower than the going concern value, as the business’s assets would likely be sold at a discount.
Fair market value is the value of your business in a hypothetical transaction between a willing buyer and a willing seller, who have reasonable knowledge of the relevant facts and act in their best interests.
How Is Business Value Calculated?
Owner operated businesses with sales of $1 million or less generally sell for one to three times its cash flow benefit to the owner (this is also known as SDE – Seller’s Discretionary Earnings using an adjusted EBITDA model). Each industry is different and there are many variables that can push the value of a business up or down like how long the business has been established, the owner’s day to day involvement, how dependent the business is on the owner, the age and condition of the assets the business owns, barrier of entry into the industry, and the amount of competition and market share the business has, each factor can push the value of a business up or down.
If the earnings are stable and growing, the value is on the higher end. If the earnings are variable or declining, the value is on the lower end.
Businesses with sales of $1 million to $10 million may sell for earnings multiples of three to five times its cash flow benefit. Businesses with sales of more than $10 million often have specific industry criteria, which may be applied to determine the value. At this level, Buyers may be paying for market share, rights to patents and processes, additions to product lines, or the benefits of strategic or administrative consolidation. A thorough investigation of the business’s financial information is required to uncover the true earnings capability of the business.
Rules of Thumb for Business Valuation
Most industries have one or more rules of thumb based on Revenue or Cash Flow performance. However, they can vary widely and, in most cases, do not give an accurate value of a business. Since each business is unique, a particular rule of thumb can be off by as much as 100% or more. A professional business broker will be able to decide what the most relevant information about a business is and use the most up to date business reference guides and comp databases to then make an informed decision about its value.
Let Horizon Business Brokers help you understand the valuation process to accurately determine the value of your business to see if you can obtain your goals in a sale now or help set yourself up for a better, more profitable sale in the future. Contact us to learn more and get the valuation process started!
Benefits of Free Business Valuation
Cost Savings
Cost savings is one of the most significant benefits of a free business valuation. Business valuation can be costly, and a free valuation can allow business owners to gain insight into their business’s financial health without incurring any costs.
Understanding Business Value
Business valuation can help businesses understand their current value, which can help them make informed decisions about financial planning, budgeting, and investment decisions.
Identifying Strengths and Weaknesses
A free business valuation can help business owners identify strengths and weaknesses within their business. In addition, this can provide a starting point for businesses to work on areas that need improvement.
Attracting Investors
A free business valuation can help businesses attract investors by providing them with valuable financial analysis, which can help investors make informed decisions.
Negotiating a Sale
A free business valuation can help business owners negotiate the sale of their business by providing them with an understanding of the business’s worth. This can help business owners set realistic asking prices and negotiate favorable terms.
How to Get a Free Business Valuation
Start by researching companies or service providers that offer free business valuation services. You can find such providers through professional networks or word-of-mouth referrals.
Once you have identified a service provider that offers free business valuation, contact them to initiate the process. This may involve filling out an online form or submitting basic information about your business.
After contacting the service provider, you must provide basic information about your business, such as its size, industry, location, and revenue. The service provider may also require additional information, such as financial statements and tax returns.
After providing the necessary information, the service provider will analyze your business’s financial data and provide a valuation report. This report will detail the business’s worth, strengths, weaknesses, and growth potential.
Review the report carefully to understand your business’s financial health clearly. Take note of any areas of concern or opportunities for growth.
Contact Us Today!
For all your business brokering needs, Horizon Business Brokers – Richmond is here to assist you. Our dedicated team is readily available to provide easy access to our services. Whether you want to request a consultation or have questions, we’re committed to delivering exceptional customer service. Located conveniently at 4870 Sadler Road, Suite 300, Glen Allen, VA 23060, you can reach us at 804-843-6848 or visit our website at https://businessbrokersrichmond.com/.
We look forward to hearing from you and helping you navigate the world of business brokerage.
