A business valuation serves as the most reliable way to determine the worth of a company. This essential service is beneficial for all types of businesses and ultimately leads to improved day-to-day and long-term management.
The associated costs are one of the most significant stumbling blocks to people getting business valuations in Canberra. The price of a valuation is often seen as too expensive, but the benefits largely justify the costs.
As these services are performed by highly qualified professionals who have worked in financial and commercial accounting. These experts are experienced in thorough and comprehensive business valuations.
Valuers are cautious to adhere to every legal requirement to ensure that the reports are seen as certified and definitive documents. As a legally-recognised report, it serves as conclusive proof of value.
The costs of a business valuation
So how much should a business valuation cost? Well, it depends on a number of applicable factors. There is no universal fee for business valuations, and the price is determined on a case-by-case basis.
The cost can vastly range, as such, getting a quote from a reliable firm will give you a clear idea of how much the service is likely to put you back.
The most important factors impacting a business valuation are:
- The purpose of the report
- The type and size of the business
- The divisions and structure of the business
- The experience and qualifications of the firm
- The state of the economy
Comparing the costs between different firms can help you find a service that falls within your budgetary restrictions. Always ensure that the business valuer you use holds the necessary qualifications for accurate reports.
Why should I pay for a valuation?
Now you may be wondering why you would ever pay that much money to find the value of your business. The benefits, however, far outweigh the costs.
A few of the main reasons owners and investors get business valuations are:
Strategic planning
One of the most obvious benefits of a valuation is that it allows for much improved strategic planning. As valuation reports give a clear insight into financial and operational efficiency, owners can identify areas that need improvement while minimising risk. All in all, a valuation allows for well-informed decisions going forward.
Settlement negotiations
A settlement negotiation can often end up being a long and drawn-out process. In cases where the value of the business forms an important part of negotiations, a valuation can remove the need for debate between parties. This can lead to a much smoother settlement process as parties can focus on the finer details.
Exit planning
In cases where a business is preparing for a change of ownership, a valuation can help ensure a well-thought-out exit plan. With a comprehensive business valuation, plans can be put in place that allows the business to continue thriving. The financial, legal, and tax repercussions are analysed.
Deceased estate
When a deceased estate includes a business, a valuation can provide clarity on its value and ensure a fair division among the beneficiaries. A valuation can help settle disagreements and prevent opportunists from taking advantage of the situation.
What is included in a business valuation?
Business valuations are wide-ranging and the details are dependent on the purpose of the report. A valuation may include:
- An analysis of the organisation’s management
- An analysis of the capital structure
- An analysis of the financial statements
- An analysis of the future earnings prospects
- An analysis of everything relevant to the operational and financial efficiency of the business.
There are different approaches that valuers follow when assessing a business. The most common methods include a review of the financial statements, discounting cash flow models, and similar company comparisons.
Each valuation report is written in line with the relevant regulatory and legislative requirements. By following international valuation standards and applying their vast experience, valuers can prepare consistently accurate reports.
Valuers operate under fundamental principles of transparency and honesty. If any part of the report is unclear to you, be sure to check with the assigned valuer who can provide clarity on the details.
In conclusion
A business valuation is clearly a useful service for anyone with a vested interest in a company. The independent report is prepared by a qualified professional who has vast experience in commercial and financial accounting.
The cost of a valuation report depends on the purpose and scale of the report as well as the firm being used and the economic conditions. Requesting quotes from reliable firms can help you determine if the service falls within your budget.
There are plenty of reasons to purchase a valuation. These include improved strategic and exit planning, useful pre-sale advice, swifter settlement negotiations, and dealing with a deceased estate.
For more information on the costs of a business valuation and why it makes sense to get one, don’t hesitate to reach out today.